European stocks climbed for the third consecutive day on Thursday, as global markets bounced back from a bout of jitters triggered by fears surrounding the spread of the Omicron coronavirus variant.
The pan-continental Stoxx Europe 600 index was up 0.6 per cent at lunchtime, recovering from a steep fall earlier this week. Frankfurt’s Xetra Dax rose 0.6 per cent while London’s FTSE 100 benchmark edged 0.2 per cent higher, taking its rise so far for December to more than 4 per cent, its best monthly performance since November last year.
“The recent improvement in global investor risk sentiment reflects less concern over the potential disruptive impact from the rapid spread of the new Omicron Covid variant on the outlook for global growth next year,” said Lee Hardman, currency analyst at MUFG Bank.
While several countries have tightened restrictions to slow the spread of the virus, “market participants already seem to have made up their minds that the threat of the quick advancing Omicron variant is manageable, for now”, said Bas van Geffen, strategist at Rabobank.
That view has been supported by data from South Africa, Denmark and the UK showing that a lower share of people infected with the Omicron variant are likely to require hospital treatment compared with cases of the Delta strain.
This improved sentiment helped spur a modest sell-off in haven assets such as core government debt, taking the yield on the 10-year German Bund up 0.04 percentage points to minus 0.25 per cent.
Futures trading pointed to stocks on Wall Street climbing, with the blue-chip S&P 500 index heading for a 0.3 per cent rise.
Helping underpin US markets ahead of the opening bell in New York was a flurry of data suggesting the world’s largest economy remained resilient. New orders of US durable goods in November increased 2.5 per cent from the previous month, beating the 1.6 per cent forecast by analysts.
US jobless claims, meanwhile, hit 205,000 last week, unchanged from a week earlier, in a sign that lay-offs remained at low levels despite concerns over the resurgence of the pandemic.
The dollar barely budged against a basket of half a dozen global currencies, nearing a one-week low, owing to the more upbeat mood among investors, said Hardman.
In Asia, China’s CSI 300 index rose 0.7 per cent on Thursday even after the country locked down 13m people in the central city of Xi’an in an attempt to slow the virus ahead of the 2022 Winter Olympics.
Ultra-accommodative financial conditions have also supported markets, which have remained easy despite the US Federal Reserve and several other central banks this month adopting a more aggressive stance in tackling surging inflation that has swept across global economies.
Still, investors expect a potentially bumpy ride over the next week as holiday-thinned trading exacerbates any volatility caused by news on the virus.
Brent crude, the global oil benchmark, was up 0.3 per cent at $75.49 a barrel, its highest in a week.
