European stock markets extend gains as Omicron fears fade

Agence France-Presse

Posted at Jan 05 2022 08:59 PM

LONDON - Europe's major stock markets advanced Wednesday as investors drew strength from easing Omicron virus concerns and shrugged off a mixed performance in Asia.

London firmed 0.2 percent around midday, while Frankfurt jumped 0.7 percent and Paris won 0.5 percent in early afternoon eurozone trade.

Markets wavered in Asia after a tepid Wall Street lead, with inflation and expected interest rate hikes returning to the fore as Omicron fears ease.

In foreign exchange, the dollar slid versus the euro before minutes from the US Federal Reserve's latest interest rate meeting.

Oil steadied after climbing Tuesday, when OPEC and its allies agreed as expected to raise output by 400,000 barrels per day in February.

"Overall, risk appetite remains positive," said ThinkMarkets analyst Fawad Razaqzada.

"The biggest driver behind this is relief that Omicron is not as deadly as Delta, which is fuelling expectations that travel restrictions and lockdowns will be lifted soon."

OMICRON RELIEF RALLY

While the new Covid variant continues to spread rapidly around the world, forcing governments to maintain containment measures, its apparently milder symptoms have also allowed traders to focus more on future economic policies and plans to rein in surging prices.

Later Wednesday sees the release of minutes from the Fed's December rate meeting, which dealers hope will provide a clearer idea about officials' policy plans.

That is followed by Friday's US jobs data for last month that could play a key role in their next deliberations.

With the bank due to end its vast bond-buying stimulus programme by March, commentators are debating when and how many times the Fed will hike US borrowing costs as it tries to overcome inflation running at a pace not seen in decades.

After ringing up new record highs on Monday, the S&P 500 fell on Wall Street, while the Nasdaq sank more than one percent as tech firms -- which generally rely on debt and low rates to fuel growth -- took a hit.

However, the Dow edged upward to strike a new all-time high.

CHINA TECH SECTOR WEIGHS

Chinese technology firms, which have been hit by a crackdown from China's government, were a big drag on Hong Kong as it sank more than one percent.

Concerns about a new Covid outbreak in the city that has led to the reimposition of containment measures added to the glum mood.

Shanghai stocks also slid but Tokyo clung onto positive territory.

In company news, China Mobile briefly soared around 10 percent on its debut in Shanghai after the telecoms giant was delisted in New York under a standoff between Beijing and Washington. It ended only slightly higher, however.

The share offer is expected to raise $8.8 billion after the company exercises an over-allotment option, according to Bloomberg News, making it the largest on China's domestic stock markets for more than a decade.