Thu. Jan 20th, 2022

European equities rose on Monday after falling on Wall Street in the previous session, as debate over the Omicron coronavirus variant and the future direction of monetary policy has kept trading conditions volatile.

The Stoxx 600 stock index opened 0.7 percent higher. London’s FTSE 100, dominated by economically sensitive banks, commodity producers and miners, rose 0.6 per cent. Futures that follow Wall Street’s S&P 500 stock index added 0.5 percent, while those that watched the technology-focused Nasdaq 100 were flat.

The move came after investors withdrew on Friday from shares in major U.S. technology and other early-stage companies, whose higher valuations are sensitive to expectations of rate hikes.

Non-farm payroll data for November showed that U.S. employers added 210,000 workers last month, less than half the number economists polled by Reuters expected to see, but also a significant decrease in the unemployment rate to 4.2 percent.

The report came days after Jay Powell, chairman of the Federal Reserve, expressed his support for a faster reduction of the central bank’s $ 120 billion a month of bond purchases that reduced borrowing costs and lifted stock valuations through the pandemic era.

“The weaker [jobs] pressure does not change the likelihood of a faster taper, as the Fed wants to indicate inflation vigilance and maintains maximum flexibility to rise [rates], ”Analysts at TD Securities said in a note to clients.

Last month, US consumer prices rose at their highest annual rate for 30 years.

The yield on the benchmark for 10-year treasury rose by 0.04 percentage points to 1,375 percent as the price of the debt fell. This significant debt yield, affecting borrowing costs globally, traded above 1.65 percent at the end of November, before the World Health Organization declared Omicron a variant of concern.

On Sunday, top US health official Anthony Fauci called early signals about Omicron’s seriousness were “encouraging”, telling CNN that while it was too soon to know the full implications of the new variant, booster jabs would “perhaps provide a significant degree of protection”.

In Asia, Hong Kong’s Hang Seng index fell 1.8 percent, with significant share price declines for major Chinese technology companies, including Alibaba and Tencent. The Topix in Tokyo closed 0.5 percent lower.

Brent crude, the international oil benchmark, rose 2.2 percent to $ 71.37 a barrel.

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