World shares take their cue from stronger Wall Street

By Danilo Masoni

MILAN (Reuters) – European and Asian stocks inched higher on Tuesday, helped by another record-setting day on Wall Street and after Britain and France held off from imposing more COVID curbs before year-end.

Asset classes from oil to equities are near or above recent highs, having clawed back losses from late November when the Omicron variant of COVID-19 sent investors scurrying for safety.

As the worst fears over the impact of the new variant have subsided, investors have returned to risk assets.

The MSCI world equities index was up 0.2% by 1142 GMT, within striking distance of a record high hit last month, as Asia and Europe rose after Monday saw the 69th all-time record high close this year for the S&P 500.

Futures on U.S. indices rose between 0.2 and 0.4% ahead of the cash market open.

Europe’s STOXX 600 equity benchmark added 0.5% to its highest since Nov. 19, while Japan’s Nikkei rose 1.4% to a one-month high and the MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5%.

“The latest rebound in risky assets was activated last week by new reports confirming that the Omicron coronavirus variant, although more transmissible… leads to fewer hospitalizations and deaths,” said Charalambos Pissouros, head of research at Cyprus-based brokerage JFD Group.

The London bourse was shut for a holiday, reducing activity across the region’s equity markets.

China reported 209 new confirmed coronavirus cases for Dec. 27, up from 200 a day earlier, mostly in the northwestern province of Shaanxi, where Xian, the provincial capital, is in lockdown.

In Europe, the British government said England would not get any new COVID-19 restrictions before the end of 2021, while the French government said it would tighten measures, though there will be no curfew for New Year’s Eve and schools will reopen as planned in early January.

The MSCI world equities index is up more than 17% so far this year, and heading into 2022 investors are wary of risks stemming from rising price pressures, slowing corporate earnings growth and the likelihood of a rate hike cycle in the U.S..

“Money growth will slow in 2022, but the market strongly doubts that the ECB and the Fed are willing to truly tighten financial conditions,” said Arne Petimezas, analyst at AFS Group in Amsterdam. “They now face a trade-off between controlling inflation or keeping this party going”.

The S&P added 1.4% to end at a record on Monday as strong retail sales underscored economic strength, and the Dow Jones rose 1% and the Nasdaq 100 added 1.6%.

Oil extended gains despite the rapid spread of Omicron, supported by supply outages and expectations that U.S. inventories fell last week.

Brent crude rose 1.5% to $79.75 a barrel and U.S. crude gained 1.6% to $76.77 a barrel.

Meanwhile, the safe-haven yen slipped to a one-month low of 114.94 per dollar and was last little change on the day.

The dollar, also a safe haven, was rangebound, despite a hawkish turn at the Federal Reserve this month that saw policymakers signal three quarter-point rate hikes in 2022.

The dollar index, which measures the currency against six major peers, was just below parity at 96.02. The pound rose 0.1% to a fresh five-week high. The euro was little changed and the risk-sensitive Australian dollar rose 0.2%.

Bitcoin fell below $50,000 and was down 3%.

In debt markets, 10-year U.S. Treasury yields stayed below Thursday’s high of just above 1.5%. Germany’s 10-year yield, the benchmark for the euro zone, added 2 basis points to -0.226%.

Spot gold rose 0.3% to its highest in over one month at $1,816.60 an ounce as the U.S. dollar weakened. [GOL/]

(Reporting by Danilo Masoni in Milan and Alun John in Hong Kong; Editing by Bernadette Baum and Alexander Smith)

By Danilo Masoni

MILAN (Reuters) – European and Asian stocks inched higher on Tuesday, helped by another record-setting day on Wall Street and after Britain and France held off from imposing more COVID curbs before year-end.

Asset classes from oil to equities are near or above recent highs, having clawed back losses from late November when the Omicron variant of COVID-19 sent investors scurrying for safety.

As the worst fears over the impact of the new variant have subsided, investors have returned to risk assets.

The MSCI world equities index was up 0.2% by 1142 GMT, within striking distance of a record high hit last month, as Asia and Europe rose after Monday saw the 69th all-time record high close this year for the S&P 500.

Futures on U.S. indices rose between 0.2 and 0.4% ahead of the cash market open.

Europe’s STOXX 600 equity benchmark added 0.5% to its highest since Nov. 19, while Japan’s Nikkei rose 1.4% to a one-month high and the MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5%.

“The latest rebound in risky assets was activated last week by new reports confirming that the Omicron coronavirus variant, although more transmissible… leads to fewer hospitalizations and deaths,” said Charalambos Pissouros, head of research at Cyprus-based brokerage JFD Group.

The London bourse was shut for a holiday, reducing activity across the region’s equity markets.

China reported 209 new confirmed coronavirus cases for Dec. 27, up from 200 a day earlier, mostly in the northwestern province of Shaanxi, where Xian, the provincial capital, is in lockdown.

In Europe, the British government said England would not get any new COVID-19 restrictions before the end of 2021, while the French government said it would tighten measures, though there will be no curfew for New Year’s Eve and schools will reopen as planned in early January.

The MSCI world equities index is up more than 17% so far this year, and heading into 2022 investors are wary of risks stemming from rising price pressures, slowing corporate earnings growth and the likelihood of a rate hike cycle in the U.S..

“Money growth will slow in 2022, but the market strongly doubts that the ECB and the Fed are willing to truly tighten financial conditions,” said Arne Petimezas, analyst at AFS Group in Amsterdam. “They now face a trade-off between controlling inflation or keeping this party going”.

The S&P added 1.4% to end at a record on Monday as strong retail sales underscored economic strength, and the Dow Jones rose 1% and the Nasdaq 100 added 1.6%.

Oil extended gains despite the rapid spread of Omicron, supported by supply outages and expectations that U.S. inventories fell last week.

Brent crude rose 1.5% to $79.75 a barrel and U.S. crude gained 1.6% to $76.77 a barrel.

Meanwhile, the safe-haven yen slipped to a one-month low of 114.94 per dollar and was last little change on the day.

The dollar, also a safe haven, was rangebound, despite a hawkish turn at the Federal Reserve this month that saw policymakers signal three quarter-point rate hikes in 2022.

The dollar index, which measures the currency against six major peers, was just below parity at 96.02. The pound rose 0.1% to a fresh five-week high. The euro was little changed and the risk-sensitive Australian dollar rose 0.2%.

Bitcoin fell below $50,000 and was down 3%.

In debt markets, 10-year U.S. Treasury yields stayed below Thursday’s high of just above 1.5%. Germany’s 10-year yield, the benchmark for the euro zone, added 2 basis points to -0.226%.

Spot gold rose 0.3% to its highest in over one month at $1,816.60 an ounce as the U.S. dollar weakened. [GOL/]

(Reporting by Danilo Masoni in Milan and Alun John in Hong Kong; Editing by Bernadette Baum and Alexander Smith)