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By Danilo Masoni and Alun John

MILAN / HONG KONG, Dec.24 (Reuters) – Stock markets in Europe and Asia cemented light holiday trading gains on Friday, as the safe haven dollar eased on signs the Omicron variant would do not significantly derail global economic growth.

The greenback was set to experience its worst week in four months, as other risky assets, from bitcoin to the Australian dollar, held onto their recent gains, supported by fading concerns about the severity of the new COVID-19 variant.

A leading European equity benchmark hovered around month-long highs after a week of gains, and the MSCI’s largest Asia-Pacific equity index outside of Japan rose 0.1% , after a closing record for the S&P 500 on Thursday.

Even though it is highly contagious, studies have shown just how less severe Omicron is than the Delta strain, fueling optimism about the limited fallout from the new restrictions and setting the MSCI Global Equity Index at a weekly gain of 2 %.

“The most popular motivation (for rallying) is the growing perception that Omicron is less lethal. This certainty has helped return risk appetite, but self-fulfilling expectations of Christmas rallies and reduced cash flow. also came into 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 picking up. So it really depends on the extent of contagion,” he added.

The US stock markets and the Treasury will be closed Friday for the holidays. In Europe, the stock exchanges of several countries, including Germany, Italy and Switzerland, have also been closed, while the stock exchanges in London and France only trade for half a day.

Stéphane Ekolo, a strategist at Tradition in London, said he would not read too much about market movements until the end of the year given the low volumes, noting how clouded the uptrend was by uncertainties ranging from inflation to central bank policy.

The U.S. Federal Reserve announced last week that it would accelerate the reduction of its massive bond purchase program and paved the way for three interest rate hikes in 2022, but that hasn’t disrupted markets like in 2013 when the Fed reduced its quantitative easing after the financial crisis. .

“As it looks like neither the 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 of institutional sales at UOB Kay Hian in Hong Kong.

Some markets, however, have fallen on more stringent measures to contain the spread of Omicron. Chinese blue chips fell 0.6% per day after rising infections in the northwestern city of Xi’an resulted in the lockdown of its 13 million residents.

SWEET DOLLARS

In forex markets, the dollar index, which measures the greenback against six major peers, was at 95.96, down 0.1% on the day and on track for a decline of 0.7% compared to last Friday’s close – its worst week since late August.

The dollar lost ground on most currencies, with the exception of the yen, another safe haven. The Japanese currency was at 114.37 per dollar on Friday and 82.82 against the Australian dollar, almost at the same level as in late November when news of the Omicron variant first surfaced.

The Aussie was at $ 0.7243, just after its five-week high of $ 0.7252 hit overnight, and the pound, which hit a monthly high of $ 1.3437 on Thursday, was at $ 1.341 for last time up 1.4% on the week. The euro gained 0.1% to $ 1.134.

The benchmark 10-year Treasury yield was 1.4926 at their close on Thursday, after hitting more than a one-week high of 1.5010% earlier in the session as investors sold off government bonds under the risk mood.

Consistent with the same trend, bitcoin rose 4.5% on Thursday, its best day in nearly two weeks, and held onto those gains on Friday in Europe, trading just above $ 51,000, up 0 , 6%.

Trading models in the world’s largest cryptocurrency are gradually aligning with risk and risk movements in traditional markets as the influence of institutional investors increases.

Oil prices fell in light holiday trading, breaking a three-day rally. Brent crude futures slipped 1.2% to $ 75.94 a barrel. American markets are closed.

The weak dollar helped gold hit its highest level in more than a month in Asian trading before squeezing gains. It was last at $ 1,807.9 an ounce, stable for the day but established for a weekly gain of 0.6%.

(Reporting by Danilo Masoni and Alun John; Editing by Toby Chopra)


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