Global Equity Waver, Oil Up in Investors Weigh Omicron Impact

WASHINGTON: Major global stock indexes were mixed on Wednesday as uncertainty over a rise in Omicron variant infections stoked optimism that tough new restrictions on trade and travel may not be needed.

European stock markets traded mixed after a weak session in Asian stock markets.

Strong US retail sales pushed the Dow Jones Industrial Average to an all-time high. The Dow has risen in six straight trading days this year, marking the longest streak of gains since its seven-session run from March 5 to March 15.

However, the S&P 500 Nasdaq Composite was down.

Some early studies downplaying the risk of hospitalization in Omicron cases have eased concerns over travel disruptions and powered the S&P 500 to a record high this week.

“The market began to recognize that the Omicron version was an oddly good news,” said Jay Hatfield, founder and CEO of Infrastructure Capital Management in New York.

“It will burn itself out more quickly because it’s easily permeable, but hospitals are less likely to be overwhelmed, even though arguably Omicron is going to be a headwind for at least the next month.”

While most economic optimism is focused on the United States, major European stock indices are up more than 16% so far this year, showing confidence in a recovery from the depths of the COVID-19 crisis.

The MSCI World Equity Index, which tracks stocks in 50 countries, rose 0.01% as it neared a five-week high hit in the previous session.

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Typically, the last five trading days of the year and the first two of the new year are seasonally strong for US stocks. But lower holiday season trading volume exaggerated price moves.

The Dow Jones Industrial Average rose 109.75 points, or 0.3%, to 36,507.96; The S&P 500 rose 7.72 points, or 0.16%, to 4,794.07; And the Nasdaq Composite fell 5.87 points, or 0.04%, to end at 15,775.85.

Brent crude delivery was up 0.38% at $79.24 a barrel. US crude was last up 0.88% at $76.65.

US crude stocks, gasoline and distillate inventories fell last week, while US oil production rose to its highest level since May 2020, Energy Information Administration data showed on Wednesday.

European government bond yields near a one-month high, Germany’s 10-year borrowing cost of -0.235% and short-debt US Treasury yields near their highest level since March 2020, suggesting that inflation may Expectations remain high.

US Treasury yields rose on Wednesday ahead of the $56 billion seven-year note auction.

“I think you have a little bit of liquidity, and yields are going up more as you have supplies,” said Zachary Griffith, a macro strategist at Wells Fargo in Charlotte, North Carolina.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.33% after six sessions of gains, following volatile US trade.

Losses in Hong Kong were down 0.99% and mainland tech stocks fell, while Chinese blue chips were down 1.4%.

In China, the city of Xian entered its seventh day of lockdown on Wednesday after it confirmed 151 domestically transmitted COVID-19 infections with symptoms on the first day.

“The uncertainty over the lockdown and policy concerns mean there could still be downside for broader China markets,” said Selina Sia, head of Greater China Equity Research at Credit Suisse Private Banking.

“But on the other hand, we have seen policy measures shifting from strictness to easing.”

A higher caution in equities supported the dollar’s strength. The dollar index, which measures the greenback against six peers, fell 0.26%. [FRX/]

Spot gold fell -0.04% to $1,804.64 an ounce[GOL/]

Graphic: Global Asset Display

Graphic: World FX Rates

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