By Peter Nurse 

Fxgecko.com - European stock markets are expected to open firmly higher Monday, unwinding some of Friday’s hefty losses as investors reassess the potential economic damage the newly discovered omicron Covid variant might cause.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 2.1% higher, CAC 40 futures in France climbed 1.7% and the FTSE 100 futures contract in the U.K. rose 1.6%.

The new coronavirus variant has spread rapidly around the world, with new cases found in the U.K., the Netherlands, Denmark and Australia, prompting more travel restrictions as countries try to isolate themselves.

The World Health Organization labelled the newly called omicron modification “a variant of concern” on Friday, but has also said it was not yet clear whether it is more transmissible than other variants, or if it causes more severe disease.

South African health experts have indicated that the symptoms from the new variant have been mild so far, while drugmaker Moderna (NASDAQ:MRNA) indicated Sunday it could roll out a reformulated vaccine early next year. 

This has prompted investors to reassess the fears that gripped the market last week that the variant could resist vaccinations and crush the economic recovery.

The airline and travel sector is likely to rebound strongly as a result, while  energy stocks are also set to gain as crude prices rebounded Monday from last week’s rout. 

Traders are now reassessing the risks to global demand from the new omicron variant ahead of this week’s meeting of top producers to decide production levels moving into the new year.

The Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, meets on Thursday, and is set to discuss the threat from the new variant as well as the decision of a U.S.-led coalition of major consumers to add output to the global supply from their emergency reserves.

The group had been widely expected to continue with its plan of gradually adding 400,000 barrels a day in January as demand recovers, but speculation is mounting that OPEC+ may decide this week to pause output increases.

By 2:05 AM ET, U.S. crude futures traded 5% higher at $71.53 a barrel, having slumped over $10 in the previous session, while the Brent contract rose 4.2% to $74.56, after falling $9.50 on Friday.

Key data releases in Europe on Monday include Eurozone business climate and economic sentiment data for November as well as flash inflation data for Germany.

Additionally, gold futures rose 0.4% to $1,795.60/oz, while EUR/USD traded 0.4% lower at 1.1267.