SYDNEY, RAW – Asian markets have regained a little composure as investors settle in for a few weeks of uncertainty on whether the Omicron variant will derail economic recoveries and the tightening plans of some central banks.

Oil prices also bounced $US3 a barrel to recoup some of Friday’s shellacking, while the safe-haven yen took a breather after its run higher.

The new variant of concern was found as far afield as Canada and Australia as more countries imposed travel restriction.

Britain called an urgent meeting of G7 health ministers on Monday, although a South African doctor who had treated cases said symptoms of Omicron were so far mild.

“There is a lot we don’t know about Omicron, but markets have been forced to reassess the global growth outlook until we know more,” said Rodrigo Catril, a market strategist at NAB.

“Pfizer expects to know within two weeks if Omicron is resistant to its current vaccine, others suggest it may take several weeks. Until then markets are likely to remain jittery.”

Trading was erratic early on Monday but there were signs of stabilisation as S&P 500 futures added 0.8 per cent and Nasdaq futures 0.9 per cent.

Both indices suffered their sharpest fall in months on Friday, with travel and airline stocks hit particularly hard.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 per cent but was off early lows. Likewise, Japan’s Nikkei pared early losses to be down 0.9 per cent.

Bonds gave back some of their gains, with Treasury futures down 11 ticks. The market had rallied sharply as investors priced in the risk of a slower start to rate hikes from the US Federal Reserve, and less tightening by some other central banks.

Two-year Treasury yields edged up to 0.55 per cent after falling 14 basis points on Friday in the biggest drop since March last year. Fed fund futures had pushed the first rate rise out by a month or so.

The shift in expectations undermined the US dollar, to the benefit of the safe-haven Japanese yen and Swiss franc.

Early on Monday, the dollar had steadied somewhat at 113.81 yen after sliding 1.7 per cent on Friday. The dollar index held at 96.190, after Friday’s 0.7 per cent drop.

The euro paused at $US1.1294, following its rally from $US1.1203 late last week.

The diary is also busy this week. China’s manufacturing PMIs on Tuesday to offer another update on the health of the Asian giant. The US ISM survey of factories is out on Wednesday, with payrolls on Friday.

Fed chair Jerome Powell and Treasury Secretary Janet Yellen speak before Congress on Tuesday and Wednesday.

Oil prices bounced after suffering their largest one-day drop since April 2020 on Friday.

Brent rebounded 3.9 per cent to $US75.57 a barrel, while US crude rose 4.5 per cent to $US71.24.

Gold has found little in the way of safe-haven demand, staying at $US1,791 an ounce.