Traders weighed confidence that immunizations will be effective against the new type against concerns about economic threats as European markets held steady on Thursday.
The Stoxx 600 Index in Europe gave up previous gains to trade unchanged, while U.S. contracts fell as the S&P 500 and the tech-heavy Nasdaq 100 extended their advances. Even as China Evergrande Group and Kaisa Group Holdings Ltd. officially defaulted on their dollar loans, Asian equities rose.
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The British pound fell to its lowest level this year as Goldman Sachs Group Inc. lowered its forecast for a rate hike in the United Kingdom and business groups urged the government to intervene after Prime Minister Boris Johnson announced restrictions to halt the spread of the variant, which Bloomberg Economics estimates could cost the economy up to 2 billion pounds ($2.6 billion) per month. In its early stages, omicron is 4.2 times more transmissible than the delta version, according to a research.
The dollar rose, while Treasuries and crude declined.
The global equity rally will be put to the test as traders anticipate volatility until more clarity on omicron’s threat to the economy emerges, as well as ahead of U.S. consumer inflation data this week and a Federal Reserve meeting next week that could provide clues on the pace of tapering and interest rate hikes.
On Bloomberg Television, Frances Stacy, portfolio strategist at Optimal Capital, said, “We’re expecting to maybe see a surge in volatility even if the market continues higher around those events next week.” “Many of the catalysts that propelled Covid’s growth are slowing. Then there’s the possibility of the Fed tapering into a slowing economy.”
Investors are also concerned about geopolitical tensions. Annalena Baerbock, Germany’s new foreign minister, echoed Western politicians’ warnings to Russia over Ukraine, saying that Moscow would pay a severe price if it went forward with an invasion of its neighbor.
According to a source familiar with the situation, the US will place SenseTime Group Inc. on an investment blacklist on Friday, accusing the artificial intelligence startup of aiding human rights abuses. That comes as the United States House of Representatives passed legislation on Wednesday aimed at punishing China over its treatment of Uyghur Muslims in the Xinjiang area.
UniCredit SpA surged after announcing that it will return at least 16 billion euros ($18.1 billion) to shareholders by 2024. LPP, Poland’s largest clothing retailer, and L’Oreal SA both saw their stock prices rise.
Electricite de France, meanwhile, dipped after Le Figaro reported that the government is exploring new measures to keep power rates from rising too much in the face of rising energy costs. After offering shares at a discount, Zur Rose Group AG fell, and Deutsche Bank fell after a report that it may have broken a criminal agreement with the US Department of Justice.
Factory inflation in China has decreased, indicating that there is greater room for stimulus measures. Meanwhile, the central bank set the yuan’s reference rate against the dollar at a lower-than-expected level, suggesting its displeasure with the currency’s recent advance. On “BloombergMarkets: Europe,” Mark Cudmore and Francine Lacqua break down today’s important themes for analysts and investors.
Bloomberg’s Markets Live team is conducting an asset outlook survey for 2022. It’s completely anonymous, takes around two minutes, and the results will be released in late December.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 was little changed as of 10:49 a.m. London time
- Futures on the S&P 500 fell 0.3%
- Futures on the Nasdaq 100 fell 0.4%
- Futures on the Dow Jones Industrial Average fell 0.3%
- The MSCI Asia Pacific Index rose 0.7%
- The MSCI Emerging Markets Index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.3% to $1.1314
- The Japanese yen rose 0.1% to 113.51 per dollar
- The offshore yuan was little changed at 6.3478 per dollar
- The British pound fell 0.1% to $1.3188
Bonds
- The yield on 10-year Treasuries declined three basis points to 1.50%
- Germany’s 10-year yield declined three basis points to -0.35%
- Britain’s 10-year yield declined five basis points to 0.72%
Commodities
- Brent crude fell 0.3% to $75.61 a barrel
- Spot gold was little changed
