After a three-day rally for stocks, where potentially affected travel stocks surged on good Omicron news, there were two conflicting headline stories released overnight that will determine what our stock market does today.

First, drug companies Pfizer and BioNTech have said their vaccine will neutralise the Omicron variant after three doses, which sent US travel stocks soaring overnight. United Airlines jumped over 4% but Norwegian Cruise Line was up a huge 10% at one stage!

That says the current view on Omicron is “move on, it’s no Delta close-down-the-economy” strand of the Coronavirus.

But in contrast, the UK Prime Minister has gone for his Plan B for fighting the virus as infections surge.

This is how the BBC summed up the new rules:

From Friday 10 December, face coverings will be mandatory for many indoor public venues including theatres and cinemas, as well as in shops and on public transport. Exceptions will be made for singing, exercise, and hospitality settings. From Monday 13 December, people should work from home "if they can".

From Wednesday 15 December people will need to show their NHS Covid Pass - or a negative lateral flow test - to gain entry to:

• Nightclubs.
• Indoor seated venues with more than 500 people.
• Unseated outdoor venues with more than 4,000 people.
• Any venue with more than 10,000 people.

This news won’t be great for stocks in the short term but it will depend on how many people in the UK end up in hospital or who die because of the variant.

Looking at the above rules, it shows the UK was much more cavalier in their reopening rules compared to us and the fully vaccinated rate is only 70%. We’re at 74% nationally, but in the more open economies of NSW and Victoria, they’re over 90% fully vaccinated.

This will help our economy weather any Omicron storm that might escalate if the US and Europe opt for restrictions but that’s a wait-and-see situation. If the Omicron story persists i.e. greater infections but low hospitalisations and deaths, then I’m confident about the economy and the stock market for 2022.

So what’s my take on investing now? Here’s what I’m working off:

• The local and global economic recoveries will be good for stocks.

• Omicron won’t be as bad as the Delta strain. Moderna’s share price fell over 13% on Monday as United Airlines' share price rose over 8%. That’s a sign that the market is less worried about Omicron.

• Views from the likes of White House medical chief Dr Anthony Fauci are cautiously positive that Omicron will be less threatening than say the Delta variant.

• Our stock market is due to be helped along by the outlook for commodities in 2022.

• And it’s time we played catch up on the US market that has zoomed ahead because of its heavy tech-laden indexes.

The charts below show how much the US market has rebounded out of the Coronavirus crash, compared to our market.

S&P 500

The S&P/ASX 200 Index

After a crash, history shows that value stocks do well compared to growth stocks and many small cap companies are indeed value stocks.

Small Ords

Right now, our Small Ords Index is up 7.8% from the pre-pandemic high of the market, while the S&P/ASX 200 is up less than 2%!

The US S&P 500 is up about 35% over that time!

My best guess is that these forces to the positive will offset the negatives of virus threats to economic normalcy, a local federal election and the likelihood that the US Federal Reserve will raise interest rates next year, which will temporarily spook the market.

Lots of companies will do well next year. Many will have bad years but I think the overall index will go higher.

Given the volatility right now, provided the Omicron threat eases, I expect stocks globally to do well in the first half of the year. And even if we lose some ground because of the expected federal election in May, after the poll we should see a nice rebound as commodity prices mix in with post-election certainty, in the context of booming local and global economies.

This has to be good for company profits and share prices.

I’m keeping my fingers crossed that Omicron is manageable — and you should too. By the way, the UK and Europe were too quick to go for normality and ease restrictions and it’s starting to catch up on them.