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GLOBAL MARKETS -Global equities waver, oil up as investors weigh Omicron impact

GLOBAL MARKETS -Global equities waver, oil up as investors weigh Omicron impact

reuters.com · 12/29/2021 11:23
GLOBAL MARKETS -Global equities waver, oil up as investors weigh Omicron impact

Updates prices, adds comment

By Katanga Johnson and Abhinav Ramnarayan

- Major global stock indexes were mixed on Wednesday as uncertainty over the surge in Omicron variant infections tempered optimism that harsh new curbs on business and travel may not be needed.

After a weak session in Asian stock markets, European stock markets traded mixed.

The Dow Jones industrial average edged toward an all-time high on strong U.S. retail sales. The Dow has risen six straight trading days, marking the longest streak of gains since a seven-session run from March 5 to March 15 of this year.

However, the S&P 500 .SPX the Nasdaq Composite .IXIC edged lower.

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

"The market started to recognize that the Omicron variant was in a strange way good news," said Jay Hatfield, founder and chief executive of Infrastructure Capital Management in New York.

"It will burn itself out more rapidly because it's easily transmissible, but it's less likely to overwhelm overwhelmed the hospitals, even though arguably Omicron is going to be a headwind for at least the next month."

While much of the economic optimism has centered on the United States, the main European stock index is up more than 16% so far this year, showing faith in a recovery from the depths of the COVID-19 crisis.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 50 countries, rose 0.01% as it hovered close to a five-week high hit in the previous session.

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Typically, the final five trading days of the year and the first two of the new year are seasonally strong for U.S. stocks. But low holiday season trading volume exaggerated price moves.

The Dow Jones Industrial Average .DJI rose 109.75 points, or 0.3%, to 36,507.96; the S&P 500 .SPX gained 7.72 points, or 0.16%, at 4,794.07; and the Nasdaq Composite .IXIC dropped 5.87 points, or 0.04%, to 15,775.85.

Brent crude LCOc1 delivery was last up 0.38%, at $79.24 a barrel. U.S. crude CLc1 was last up 0.88%, at $76.65.

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

European government bond yields remained near one-month highs, with Germany's 10-year borrowing costs DE10YT=RR holding at -0.235% and short-dated U.S. Treasury yields near their highest since March 2020, suggesting that inflation expectations remain elevated.

Long-dated U.S. Treasury yields rose on Wednesday before a $56 billion seven-year note auction. nL1N2TE0PG

"I think you have a little bit of illiquidity, and yields moving higher as you do have supply," said Zachary Griffiths, a macro strategist at Wells Fargo in Charlotte, North Carolina.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.33%, after six sessions of gains, following volatile U.S. trade.

There were losses in Hong Kong .HSI, down 0.99% and hurt by declines in mainland tech stocks, while Chinese blue chips .CSI300 shed 1.4%.

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

"Uncertainty over lockdowns and policy concerns mean there can still be downside for the 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 that policy measures look to be shifting from tightening to easing."

Greater caution in equities helped the dollar firm slightly. The dollar index, which measures the greenback against six peers =USD, fell 0.26% FRX/

Spot gold prices XAU= fell -0.04%, to $1,804.64 an ounceGOL/

Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

Graphic: World FX rates http://tmsnrt.rs/2egbfVh

Emerging markets http://tmsnrt.rs/2ihRugV

Global asset performance http://tmsnrt.rs/2yaDPgn

Stocks position for a strong 2022https://tmsnrt.rs/3EzPRkT

(Reporting by Katanga Johnson in Washington and Abhinav Ramnarayan in London
Additional reporting by Scott Murdoch
Editing by Alex Richardson, Nick Macfie, Barbara Lewis and Richard Chang)