LONDON, Dec.29 (Reuters) – A Christmas rally in European stocks came to a halt near five-week highs on Wednesday, as investors acted a little cautiously as the end of the market approached year, Omicron coronavirus cases swelling around the world.

After a strong advance during the holiday season, stock investors were looking to position themselves more conservatively in the final sessions of 2021 and pay a little more attention to the uncertainty caused by the persistence of COVID-19 in the world.

After a weak session in Asian stock markets, European stock markets opened flat to a bit higher with the Pan-European Stoxx 600 Index (.STOXX) up 0.2%, capping a rise of 5.7% this month so far.

But Wall Street futures were showing a rebound and oil prices edged up as optimism refused to be overcome by concerns about Omicron’s impact on global economies. , Read more

“The Omicron variant continues to rage and fail to register in this market, even as global cases have passed one million for the second day in a row,” SaxoBank strategists said in a note.

Although they noted that the “meteoric rally in the stock markets” appears to have come to a halt, the rebound in the futures market has already erased some of the modest damage, they said.

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

The MSCI Global Equity Index (.MIWD00000PUS), which tracks stocks from 50 countries, was down slightly on the day but close to a five-week high reached in the previous session.

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European government bond yields remained near one-month highs, with Germany’s 10-year borrowing costs remaining at -0.235% and short-term US Treasury yields hovering near their highs. high since March 2020, suggesting that inflation expectations remain high.

French fund manager Indosuez said he expects global growth of 4% in 2022, with some risks due to the circulation of the new variant, but with economies still benefiting from favorable monetary policy and economic growth. ‘a generous fiscal policy.

Inflation would remain above central bank targets at around 3.5% in the United States and 2.5% in Europe, he said.

Earlier, the MSCI’s largest Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) fell 0.3%, after six sessions of gains, as a result of volatile trading in the United States.

There were losses in Hong Kong (.HSI), down 0.99% and affected by the decline in mainland tech stocks, while Chinese blue chips (.CSI300) lost 1.4%.

In China, the city of Xian entered its seventh day of closure on Wednesday after reporting 151 locally transmitted COVID-19 infections with symptoms confirmed the day before.

“Uncertainty over lockdowns and political concerns mean there may still be downsides for the wider Chinese 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 seem to shift from tightening to easing.”

The more cautious mood for equities helped the dollar strengthen slightly. The dollar index, which measures the greenback against six peers, was at 96.19, from a low of 95.958 on Friday.

Gold was slightly lower with the spot price at $ 1,803.93 an ounce.

Reporting by Abhinav Ramnarayan, Additional reporting by Scott Murdoch, Editing by Alex Richardson

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