MILAN: Stock markets in Europe and Asia cemented gains in light holiday trade on Friday, while the safe-haven dollar eased on signs the Omicron variant would not significantly derail global economic growth.
The greenback was set for its worst week in four months while other risk-friendly assets from bitcoin to the Australian dollar held onto their recent gains, buoyed by ebbing concerns over the severity of the new COVID-19 variant, report agencies.
Even though it is highly infectious, studies have shown how Omicron is less severe than the Delta strain, fuelling optimism about a limited fallout from new restrictions, and setting the MSCI world equity index for a 2per cent weekly gain.
“The most popular motivation (for the rally) is the growing perception that Omicron is less lethal. This certainty helped risk appetite return, but self-fulfilling expectations of Christmas rallies and reduced liquidity also came in play,” said Giuseppe Sersale, fund manager at Anthilia in Milan.
“I still think the news on Omicron is good, but not as good as the market is taking it. So it really depends on how much the contagions will fly,” he added.
U.S. equity and Treasury markets will be closed on Friday for the holiday. In Europe, stock markets in several countries including Germany, Italy and Switzerland were also shut, while bourses in London and France trade only half day.
Stephane Ekolo, strategist at Tradition in London, said he would not read too much in market moves going into year end given the thin volumes, noting how the upward trend was clouded by uncertainties ranging from inflation to central bank policy.
“As it looks like neither tapering nor the Omicron variant will have too much of an effect on the economy, globally, money is flowing into equities,” said Steven Leung executive director for institutional sales at UOB Kay Hian in Hong Kong.
Some markets, however, fell on tighter measures to contain the spread of Omicron. Chinese blue chips slipped 0.6per cent a day after rising infections in the northwestern city of Xi’an resulted in a lockdown of its 13 million residents.
In currency markets, the dollar index, which measures the greenback against six major peers was at 95.96, down 0.1per cent on the day and on course for a 0.7per cent drop from last Friday’s close - its worst week since late August.