A look at the day ahead from Sujata Rao.

World stocks' 0.6% rise on Monday came nowhere close to recouping Friday's 2.2% loss, but even that is under threat after Moderna (NASDAQ:MRNA) CEO Stephane Bancel predicted existing vaccines would struggle with the Omicron variant.

Fed Chairman Jerome Powell will also tell U.S. lawmakers later in the day the variant could imperil economic recovery, prepared remarks show. Those comments have already sent 10-year Treasury yields down 7 basis points this morning.

So a loss-making Asian session has given way to red ink in Europe, where German markets appear headed 2% lower. Futures point to hefty Wall Street losses, the yen and Swiss franc are again catching a bid and oil prices have slid more than $1.

COVID headlines overshadowed a pickup in official Chinese PMIs, which showed factory activity cranking up in November and services coming in steady from the previous month.

And for those still in data watching mode, euro zone inflation data could show a big number, accelerating from October's 4.1%. Remember, Monday brought German November CPI of 5.2% year-on-year, the highest since 1992. The picture is one of economic growth under threat, even as a possible COVID comeback risks exacerbating supply chain glitches.

What happens next is anyone's guess. Citi analysts write that Friday's selloff wiped out investors' bullish bias on the S&P 500, while European positioning had already turned neutral in Europe.

There is room for more position unwinding, but also scope for a bounce.

Key developments that should provide more direction to markets on Tuesday:

- ECB likely to keep buying bonds through 2022; could resume PEPP - ECB Vice President Luis de Guindos

-South Korea, global trade bellwether, saw October factory output shrink at the sharpest pace in nearly 1-1/2 years

-Airline easyJet (LON:EZJ) sees softening in demand as COVID clouds outlook

-Macau gambling group Suncity's shares plunge after CEO arrested

- Twitter (NYSE:TWTR) CEO Jack Dorsey hands reins to technology chief Agrawal

-NATO Foreign Ministers meeting in Latvia

-France flash CPI; Euro zone flash inflation

-Fed speakers: Jerome Powell testifies before a Senate Banking Committee; New York President John Williams

-Emerging markets: Hungary central bank meets: Turkey Q3 GDP, India Q3 GDP

-Monthly US house prices/Chicago PMI

-Europe earnings; EasyJet, Wise,

-US earnings: Salesforce (NYSE:CRM) Graphic: Euro zone inflation, https://fingfx.thomsonreuters.com/gfx/mkt/egpbkazodvq/Pasted%20image%201638220831318.png