Stocks in Europe edged higher on Wednesday along with US equity-index futures as investors assessed the economic implications of the omicron coronavirus outbreak. Treasuries and the dollar were steady.
The Stoxx Europe 600 index nudged to within a whisker of another record, with retailers outperforming. Technology shares declined, following the sector’s retreat in Asia and the US. Contracts on the S&P 500 and Nasdaq 100 rise after the rally in US stocks paused. Volumes remained thin into the end of the year in some markets.
Investors are rounding out the year by booking some profits after a 17% jump in global equities. The coronavirus, Federal Reserve policy tightening and China’s outlook are among the key risks for 2022. Omicron fears are easing on growing evidence that the fast-spreading strain leads to milder symptoms, even as worldwide Covid-19 cases rose above 1 million for a second straight day.
“Although omicron cases in the US and Europe amongst others, continue to surge, it has yet to make its presence felt negatively in economic data,” Jeffrey Halley, a senior market analyst at Oanda, said in a note. “With market activity much reduced for the holiday season, investors continue to tentatively price in a global recovery hitting a minor bump, and not a pothole.”
Crude oil held near a one-month high, partly on bets that the global recovery can ride out omicron. Iron ore futures in Singapore and China declined for a third day. Bitcoin was around $48,000 after a tumble that hinted at diminished ardor for the most speculative
Shares slipped in Japan, technology stocks drove a retreat in Hong Kong and China slid. Sentiment in China is being sapped by Beijing’s tightening oversight of overseas share sales and economic risks from a property slowdown. Authorities are expected to add stimulus next year to steady expansion.
In the latest US data, the Richmond Fed’s manufacturing survey rose in December, beating estimates. Growth in US home prices cooled modestly in October after soaring during the pandemic.
“We’re sober about potential headwinds that still could be coming, even the rest of this year, but early in 2022 — the Fed is going to be raising rates, that will change things for the markets,” Ann Miletti, head of active equity at Allspring Global Investments, said on Bloomberg Television.