• Bourses across Europe have held onto losses seen at the cash open; US equity futures are firmer with RTY outpacing and NQ lagging
• South African scientist sees an exponential rise in new COVID cases with predominance of Omicron; India said the two cases it sees are mild
• Apple (AAPL) reportedly told iPhone component suppliers that demand has slowed down ahead of the holiday period
• Chinese advisors to recommend lowering the 2022 GDP growth target amid headwinds from property market and COVID
• TRY was pressured again after Turkish President Erdogan replaced the Finance Minister
• Looking ahead, highlights include Fed's Bostic, Quarles, Daly, Barkin, ECB's Panetta, JMMC/OPEC+ meetings

CORONAVIRUS UPDATE

US CDC identified the first case of Omicron COVID-19 in the US which was in California, while it noted that it was a fully vaccinated individual that returned from South Africa on November 22nd who had mild symptoms which are now improving and an all known contacts with the individual have been contacted and tested negative. (Newswires)

GlaxoSmithKline's (GSK LN) COVID treatment Sotrovimab retains its activity against Omicron variant; data to be confirmed by further testing; UK MHRA has approved the used of Sotrovimab - too early to know whether Omicron has any impact on effectiveness. (Newswires) Pfizer (PFE) executive does not expect a significant drop in effectiveness vs Omicron variant; will know in around 2-3 weeks if its vaccine is effective. Moderna (MRNA) said it could have an Omicron specific COVID-19 booster shot ready as soon as March. (Newswires)

South African scientist for the Diseases Institute Von Gottberg says seeing an exponential rise in new COVID cases with predominance of Omicron variant across the country; expects fewer active cases and hospitalisations this wave. Infections will be less severe, and that is what South Africa is trying to prove; seeing some more children in hospitals but more research is needed. (Newswires)

Indian officials have seen mild cases in Omicron patients. India reported two cases of the variant. (Newswires)

UK Health Secretary Sajid Javid announced the UK secured 54mln additional doses of the Pfizer (PFE) / BioNTech (BNTX) jabs and 60mln additional doses of the Moderna (MRNA) vaccine for the next two years which he said will help the UK to "buy time" with the new variant. (Newswires)

South Korea's government is considering coronavirus measures including banning social gatherings and reducing business hours, while it was also reported that South Korea is considering halting its gradual return to normal life as COVID-19 infections rise and it also reported a fresh record daily increase in cases, as well as confirmed its first case of the Omicron variant. (Newswires/Yonhap)

The Japanese government will temporarily invalidate special visas issued to foreign nationals who meet certain conditions in an effort to curb the spread of the Omicron variant, Nikkei sources. (Nikkei)

ASIA

Asian equity markets traded tentatively following the declines on Wall St where all major indices extended on losses and selling was exacerbated on confirmation of the first Omicron case in the US, while the Asia-Pac region also contended with its own pandemic concerns. ASX 200 (-0.2%) was subdued amid heavy losses in the tech sector and with a surge of infections in Victoria state, although downside in the index was cushioned amid inline Retail Sales and Trade Balance, as well as M&A optimism after Woolworths made a non-binding indicative proposal for Australian Pharmaceutical Industries. Nikkei 225 (-0.7%) weakened after the government instructed airlines to halt inbound flight bookings for a month due to fears of the new variant and with auto names also pressured by declines in monthly sales amid the chip supply crunch. KOSPI (+1.6%) showed resilience amid expectations for lawmakers to pass a record budget today and recouped opening losses despite the record increase in daily infections and confirmation of its first Omicron cases, while the index also shrugged off the highest CPI reading in a decade which effectively supports the case for further rate increases by the BoK. Hang Seng (+0.6%) and Shanghai Comp. (-0.1%) were choppy following another liquidity drain by the PBoC and with tech pressured in Hong Kong as Alibaba shares extended on declines after recently slipping to a 4-year low in its US listing. Beijing regulatory tightening also provided a headwind as initial reports suggested China is to crack down on loopholes used by tech firms for foreign IPOs, although this was later refuted by China, and the CBIRC is planning stricter regulations on major shareholders of banks and insurance companies, as well as confirmed it will better regulate connected transactions of banks. Finally, 10yr JGBs were higher as prices tracked gains in global counterparts and amid the risk aversion in Japan, although prices are off intraday highs after hitting resistance during a brief incursion to the 152.00 level and despite the marginally improved metrics from 10yr JGB auction.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a CNY 90bln net daily drain. (Newswires)PBoC set USD/CNY mid-point at 6.3719 vs exp. 6.3648 (prev. 6.3693)

Chinese advisors to recommend lowering the 2022 GDP growth target amid headwinds from property market and COVID, sources state; Advisors suggested targets of "5%-5.5%" or "above 5%" (vs the "above 6%" target set for 2021). (Newswires)

China's banking and insurance regulator said it is planning stricter regulations on major shareholders of banks and insurance companies, while it also confirmed it will better regulate connected transactions of banks. (Newswires)

US

Fed's Mester (2022, 2024 Voter) said she is open to considering a faster taper pace and that momentum in the economy is clear and has seen higher inflation, while she added that Omicron is a risk but more data is needed. Furthermore, Mester said that a faster taper gives the Fed the ability to hike if necessary and that she supports ending taper in Q1 or early Q2 next year. (Newswires)

US President Biden said steps being taken will move goods more quickly and get products on shelves, while he noted the 24/7 LA Port operations have led to a 40% drop in numbers of containers waiting on docks for over 8 days. Furthermore, he stated they are heading into the holiday season in a strong shape and measures on gasoline prices are making a difference with wholesale oil and gas prices coming down significantly, while the savings on oil and gas should reach US consumers soon. (Newswires)

Multiple sources told Politico it's highly unlikely the House was to vote on Wednesday as Democrats and Republicans continue to be at a standstill over CR. In relevant news, CNN’s Raju tweeted that multiple GOP senators said they ultimately plan to vote to keep the government open, so even if there’s a brief shutdown over the weekend, it won’t last long, while conservatives are demanding CR defund vaccine mandate and it is unclear if they would be satisfied with just a vote on an amendment. (Politico/Twitter)

Apple (AAPL) reportedly told iPhone component suppliers that demand has slowed down ahead of the holiday period. (Newswires)

UK/EU

US is delaying a deal to remove Trump-era tariffs on UK steel and aluminium due to concerns regarding UK threats to trigger Article 16. (FT)

EQUITIES

Bourses across Europe have held onto losses seen at the cash open (Euro Stoxx 50 -1.4%; Stoxx -1.2%), as the region plays catchup to the downside seen on Wall Street – seemingly sparked by a concoction of hawkish Fed rhetoric and the discovery of the Omicron variant in the US. Nonetheless, US equity futures are firmer across the board but to varying degrees – with the cyclical RTY (+1.1%) and the NQ (+0.3%) the current laggard. European futures ahead of the cash open saw some mild fleeting impetus on reports GlaxoSmithKline's (-0.3%) COVID treatment Sotrovimab retains its activity against Omicron variant, and the UK MHRA simultaneously approved the use of Sotrovimab – but caveated that it is too early to know whether Omicron has any impact on effectiveness. Conversely, brief risk-off crept into the market following commentary from a South African Scientist who warned the country is seeing an exponential rise in new COVID cases with a predominance of Omicron variant across the country – with the variant causing the fastest ever community transmission - but expects fewer active cases and hospitalisations this wave. Back to Europe, Euro indices see broad-based losses whilst the downside in the FTSE 100 (-0.7%) is less severe amid support from its heavyweight Oil & Gas sector – the outperforming sector in the region. Delving deeper, sectors see no overarching theme nor bias – Food & Beverages, Autos and Banks are towards the top of the bunch, whilst Tech, Telecoms, and Travel &Leisure. Tech is predominantly weighed on by reports that Apple (-2% pre-market) reportedly told iPhone component suppliers that demand slowed down. As such ASML (-5.0%), STMicroelectronics (-4.4%) and Infineon (-3.6%) reside among the biggest losers in the Stoxx 600. Deliveroo (-5.3%) is softer following an offering of almost 18mln at a discount to yesterday's close. In terms of market commentary, Morgan Stanley believes that inflation will remain high over the next few months, in turn supporting commodities, financials and some cyclical sectors. The bank identifies beneficiaries including EDF (-1.5%), Engie (-1.2%), SSE (-0.2%), Legrand (-1.3%), Tesco (-0.5%), BT (-0.8%), Michelin (-1.6%) and Sika (-0.9%).

FX

DXY - Currency markets are still in a state of flux, or limbo bar a few exceptions, and the Greenback is gyrating against major peers awaiting the next major event that could provide clearer direction and a more decisive range break. Thursday’s agenda offers some scope on that front via US initial jobless claims and a host of Fed speakers, but in truth NFP tomorrow is probably more likely to be influential even though chair Powell has effectively given the green light to fast-track tapering from December. In the interim, the index continues to keep a relatively short leash around 96.000, and is holding within 96.138-95.895 confines so far today.

JPY/CHF - Although risk considerations look supportive for the Yen, on paper, UST-JGB/Fed-BoJ differentials coupled with technical impulses are keeping Usd/Jpy buoyant on the 113.00 handle, with additional demand said to have come from Japanese exporters overnight. However, the headline pair may run into offers/resistance circa 113.50 and any breach could be capped by decent option expiry interest spanning 113.60-75 (1.5 bn). Similarly, the Franc has slipped back below 0.9200 on yield and Swiss/US Central Bank policy stances plus near term outlooks, and hardly helped by a slowdown in retail sales.

GBP/CAD/NZD - All firmer vs their US counterpart, though again well within recent admittedly wide ranges, and the Pound perhaps more attuned to Eur/Gbp fluctuations as the cross retreats to retest 0.8500 and Cable rebounds to have another look at 1.3300 where a fairly big option expiry resides (850 mn). Indeed, Sterling has largely shrugged off the latest BoE Monthly Decision Maker Panel release that in truth did not deliver any clues on what is set to be another knife-edge MPC gathering in December. Elsewhere, the Loonie is straddling 1.2800 with eyes on WTI crude ahead of Canadian jobs data on Friday and the Kiwi is hovering above 0.6800 after weaker NZ Q3 terms of trade were offset to some extent by favourable Aud/Nzd headwinds.

AUD/EUR - Both narrowly mixed against US Dollar, with the Aussie pivoting 0.7100 in wake of roughly in line trade and retail sales data overnight, but wary about the latest virus outbreak in the state of Victoria, while the Euro is sitting somewhat uncomfortably on the 1.1300 handle amidst softer EGB yields and heightened uncertainty about what the ECB might or might not do in December on the QE guidance front.

EM - More conflicting factors for the Rub given ongoing geopolitical angst and heightened tensions with Ukraine vs hawkish commentary from the CBR, while the Cny and Cnh remain resilient even though sources suggest that Chinese advisers are advocating a downgrade to next year’s growth target on property market and COVID-19 risks to GDP. In Hungary, another move by the NBH to widen the corridor between benchmark rates and the 1 week depo has underpinned the Huf in stark contrast to the Try following more meddling from Turkish President Erdogan (replacing the Finance Minister this time) and signals that rates will be lowered again next month from the CBRT Governor.

Turkish President Erdogan removed the Finance Minister and named Nurettin Nebati as the new Finance Minister. (Newswires)

FIXED INCOME

Bonds seemed all set to drift ahead of the US open and another relatively busy agenda, but got a fresh boost from the latest assessments on Omicron from source that sparked another bout of risk aversion. In short, the new strain is said to be the quickest to transmit and the biggest variant among the exponential rise in COVID-19 sweeping South Africa, albeit with less severe symptoms. Bunds are back up near best levels (172.60) having whittled more gains to just 5 ticks at 172.12 and Gilts are closer to their minor new Liffe peak (126.54) than 126.32 low, while US Treasuries remain mostly sub-par bar the long bond amidst further curve flattening. Ahead, Challenger lay-offs, IJC and a spring of Central Bank speakers.

COMMODITIES

WTI and Brent front-month futures are firmer intraday as traders gear up for the JMMC and OPEC+ confabs at 12:00GMT and 13:00GMT, respectively. The jury is still split on what the final decision could be, but the case for OPEC+ to pause the planned monthly relaxation of output curbs by 400k BPD has been strengthening against the backdrop of Omicron coupled with the coordinated SPR releases (an updating Rolling Headline is available on the Newsquawk headline feed). As expected, OPEC sources have been testing the waters in the run-up, whilst yesterday's JTC/OPEC meetings largely surrounded the successor to the Secretary-General position. Oil market price action will likely be centred around OPEC+ today in the absence of any macro shocks. WTI Jan resides around USD 66.50/bbl (vs low USD 65.41/bbl) whilst Brent Feb briefly topped USD 70/bbl (vs low USD 68.73/bbl). Elsewhere, spot gold has eased further from the USD 1,800/oz after failing to sustain a break above the 50, 100 and 200 DMAs which have all converged to USD 1,791/oz today. LME copper is on the backfoot amid the cautious risk sentiment, with the red metal back under USD 9,500/t but off overnight lows.

GEOPOLITICAL

Russia has detained three Ukrainian agents, via Ifax; Russia says one of the agents planned a bomb attack. Ukraine Foreign Minister discussed severe economic sanctions on Russia with US Secretary of State Blinken to discourage Russia from further aggressive actions. Russia's Kremlin says Ukrainian President's pledge to return annexed Crimea is a direct threat to Russia; Russia is still worried about the prospect of a Ukrainian military move in Donbass. (Newswires)

Israel PM Bennett has called on global powers to halt nuclear discussions with Iran with immediate effect amid the IAEA announcement on uranium enrichment at the Fordow plant. (Newswires)