Global stocks and oil prices rebounded on Wednesday after a punitive previous session in which concerns over the Omicron coronavirus variant and hawkish comments from the chairman of the US Federal Reserve weighed on global markets.

Wall Street’s S&P 500 stock gauge opened 1.1% more, after closing nearly 2% lower on Tuesday. The technology-focused Nasdaq Composite rose 1.2%.

The European Stoxx 600 index rose around 1.1%, after closing down 0.9% in the previous session, with widespread gains led by oil producers, industrial and materials groups and the banks. The UK’s FTSE 100, which brings together companies from these economically sensitive sectors, added 1%.

Fed Chairman Jay Powell told a congressional hearing on Tuesday that the risk of higher inflation had increased and signaled his support for a faster cut in stimulus than the US central bank had in place at the start of the pandemic.

But he also called the US economy “very strong” ahead of US employment data on Friday that economists polled by Reuters expect to show employers added more than half a million new hires last month.

“The markets have obviously been very concerned about the emergence of Omicron, but we are still in uncharted territory, no one really knows that,” said Aneeka Gupta, research director at ETF provider WisdomTree. “Powell’s vote of confidence in the economy has helped bring back some risk appetite.”

Kasper Elmgreen, head of equities at European fund manager Amundi, warned that such confidence would remain fragile as markets wavered between optimism about economic growth and a “humble reminder that the pandemic stays with us.”

The markets, he added, “could stay in this tug-of-war for a while because there really isn’t a clear direction.”

The chief executive of vaccine maker Moderna predicted in an interview with the Financial Times on Tuesday that existing jabs would be much less effective in combating Omicron than previous strains of coronavirus. Later, the University of Oxford and BioNTech predicted that currently available vaccines would continue to prevent serious illness.

The FTSE All-World index of developing and emerging market stocks has lost just 0.4% so far this week despite the swings of the past few days.

In government debt markets, the yield on the benchmark 10-year US Treasury bill, which moves inversely to its price, increased 0.04 percentage points to around 1.48%.

The two-year Treasury yield, which tracks interest rate expectations, rose 0.07 percentage point to 0.59%. Shares of US and European banks, seen as the beneficiaries of higher interest rates, also rebounded. The Stoxx banking index rose 2.5% while financial institutions listed on the S&P 500 rose 1.4%.

Brent crude, the international benchmark, jumped 2.5% to $ 70.98 a barrel after falling nearly 4% on Tuesday, as investors anticipated the outcome of the producer group’s Opec + meeting and its allies this week.

In Asian markets, Hong Kong’s Hang Seng index rose 0.8% while Japan’s Topix index climbed 0.4%.

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