World stock markets rebounded Tuesday from a fierce Omicron-fuelled selloff, but natural gas prices spiked to record peaks and fanned global inflation worries.
Markets in Asia, Europe and the US were on the front foot, as investors clawed back Monday’s losses that were sparked by concerns over the fast-spreading Omicron coronavirus variant.
Stocks and oil prices trod higher as bargain-buyers moved in, though investors remain fixated on Omicron strain and moves to contain it over Christmas and New Year.
Gas prices however jumped to all-time highs on winter demand concerns and simmering geopolitical tensions between key supplier Russia and consumer nations, ringing inflation alarm bells for investors.
– Festive volatility –
“Traders may be in holiday mode but this is having no dampening effect on the markets, which are continuing to see plenty of volatility as we near the end of the year,” OANDA analyst Craig Erlam told AFP.
“Naturally Omicron and all of the headlines that come with it is playing a huge role, not to mention last week’s plethora of interest rate decisions and the political circus in Washington,” he added.
With many investors on the sidelines for the holidays liquidity is low in the market, which can accentuate market swings.
Sentiment was also jarred by news that Europe’s reference Dutch TTF gas price hit 175 euros per megawatt hour in early afternoon deals, while UK prices leapt to 435 pence per therm.
“Inflation is already soaring and a growing concern for central banks and higher gas prices will only exacerbate the move further, which could increase the squeeze on households and businesses,” said Erlam.
The rise in gas prices and the latest wave of Covid cases come just as central banks around the world begin to remove the ultra-loose monetary policies put in place at the start of the pandemic to protect economies from the ravages of lockdowns.
Combined with the Omicron variant that is sweeping through populations and forcing governments to reimpose anti-virus measures, the global economy faces a myriad of threats.
Reports that moderate Democratic Senator Joe Manchin could still be willing to discuss US President Joe Biden’s $1.75 trillion social spending bill — having delivered a blow to the White House Sunday by rejecting it — provided a little support, with talks likely to drag.
Elsewhere Tuesday, the Turkish lira extended dollar gains after surging in response to measures announced by the nation’s government to bolster the beleaguered currency.
– Key figures around 1430 GMT –
London – FTSE 100: UP 1.0 percent at 7,270.91 points
Paris – CAC 40: UP 1.1 percent at 6,948.05
Frankfurt – DAX: UP 1.2 percent at 15,423.05
EURO STOXX 50: UP 1.5 percent at 4,166.68
New York – Dow: UP 0.9 percent at 35,241.79
Tokyo – Nikkei 225: UP 2.1 percent at 28,517.59 (close)
Hong Kong – Hang Seng Index: UP 1.0 percent at 22,971.33 (close)
Shanghai – Composite: UP 0.9 percent at 3,625.13 (close)
Euro/dollar: UP at $1.1283 from $1.1279 late on Monday
Pound/dollar: UP at $1.3259 from $1.3207
Euro/pound: DOWN at 85.11 pence from 85.40 pence
Dollar/yen: UP at 113.84 from 113.61 yen
Brent North Sea crude: UP 2.1 percent at $73.03 per barrel
West Texas Intermediate: UP 2.5 percent at $70.29
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