Global equity markets climbed on Tuesday, boosted by another record-setting open on Wall Street as investors shrugged off concerns over Omicron-driven travel disruptions and store closures.
Asset classes from oil to equities are near or above recent highs, having clawed back losses from late November, when the Omicron variant of COVID-19 sent investors scurrying for safety.
A delay in Britain and France on imposing more COVID curbs before year-end also excited investors. As the worst fears over the impact of the variant have subsided, investors have returned to risk assets.
The MSCI world equities index was up 0.2%,within striking distance of a record high hit last month.
The S&P 500 hit a record high.
The Dow Jones Industrial Average rose 156.94 points, or 0.43%, to 36,459.32, the S&P 500 gained 2.29 points, or 0.05%, to 4,793.48 while the Nasdaq Composite dropped 57.57 points, or 0.36%, to 15,813.69 by 12:15 pm EST (1715 GMT).
Europe’s STOXX 600 equity benchmark added 0.5%.Japan’s Nikkei rose 1.4% to a one-month high and MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5%.
“The latest rebound in risky assets was activated last week by new reports confirming that the Omicron coronavirus variant, although more transmissible… leads to fewer hospitalisations and deaths,” said Charalambos Pissouros, head of research at Cyprus-based brokerage JFD Group.
China reported 209 new confirmed coronavirus cases for December 27, up from 200 a day earlier, mostly in the northwestern province of Shaanxi, where Xian, the provincial capital, is in lockdown.
In Europe, the British government said England would not get any new COVID-19 restrictions before the end of 2021, while the French government said it would tighten measures, though there will be no curfew for New Year’s Eve and schools will reopen as planned in early January.
The MSCI world equities index is up more than 17% so far this year, and heading into 2022 investors are wary of risks stemming from rising price pressures, slowing corporate earnings growth and the likelihood of a rate hike cycle in the US.
“Money growth will slow in 2022, but the market strongly doubts that the ECB and the Fed are willing to truly tighten financial conditions,” said Arne Petimezas, analyst at AFS Group in Amsterdam. “They now face a trade-off between controlling inflation or keeping this party going”.
Oil extended gains despite the rapid spread of Omicron, supported by supply outages and expectations that US inventories fell last week.
Brent crude rose 0.7% a barrel and US crude gained 0.65%.
Meanwhile, the safe-haven yen slipped to a one-month low of 114.94 per dollar and was last little changed on the day.
The dollar, also a safe haven, was range bound, despite a hawkish turn at the Federal Reserve this month with policymakers signaling three quarter-point rate hikes in 2022.
The dollar index was up 0.05% against a basket of six major peers.
Bitcoin dropped 4.9%. In debt markets, two-year Treasury yields hit almost two-year highs on Tuesday, following tepid demand for an auction of the notes on Monday, while longer-dated yields dipped but held within their recent ranges in light trading.
Spot gold hit its highest price in over a month and was up 0.02%.
