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European and Asian stock indices rose slightly on Tuesday. The S&P 500 hit a record high: markets supported the optimistic outlook.
Europe and Asia ended the trading day with gains due profitable Monday on Wall Street. The news that the UK and France decided to suspend the imposition of new restrictions due to COVID-19 until the end of the year also had its impact.
Nearly all assets, from oil to stocks, are near or above recent highs, having cut losses since November, when the COVID-19 Omicron variant forced investors to rush for safety.
As the worst fears about the impact of the new variant subsided and markets accepted the latest restrictions, investors returned to risky trading areas.
The MSCI World Stock Index went up 0.2% by 11:42 GMT, and the S&P 500 continued to rise, adding 1.78% (about 82 points) since the New York Stock Exchange opened at 3:30 pm GMT.
The Dow Jones is also giving strong performance, having risen by 1.60% since the start of the session.
US index futures went up 0.2-0.4% at the premarket and continue to rise, except for the S&P 500.
Europe's STOXX 600 stock index increased by 0.5% to its highest level since November 19, while Japan's Nikkei rose by 1.4% to a one-month high and the broadest index of Asia-Pacific stocks outside Japan added 0.5%.
Analyst Charalambos Pissouros said that the latest recovery in risky assets had been activated in the previous week by new reports. He added that they confirmed the Omicron coronavirus variant caused fewer hospitalizations and deaths.
The London Stock Exchange was closed for the holiday, reducing activity in the region's stock markets.
China reported 209 new confirmed coronavirus cases on December 27, compared with 200 cases a day earlier, mostly in northwestern Shaanxi province. Xian, the provincial capital, is in lockdown.
The British government stated the UK Parliament was not planning to tighten COVID-19 measures until the end of 2021, while the French government declared it would tighten the regime, although it would not impose a curfew on New Year's Eve and schools would reopen as had planned in early January.
Notably, the MSCI World Stock Index went up more than 17% this year. Besides, in 2022 investors are wary of the risks posed by rising price pressures, slowing corporate earnings growth and the likelihood of a US rate hike cycle. The same situation concerns the S&P 500.
Thus, S&P 500 futures dropped by 1.49% since the start of trading, indicating that investors are not interested in taking long positions. This is probably a consequence of their fairly serious volatility, which makes players cautious.
Analyst Arne Petimezas said that money supply growth would slow down in 2022, though the market strongly doubted that the ECB and the Fed were really willing to tighten financial conditions. He added that the market faced a choice between curbing inflation or continuing this process.
Notably, the day before the S&P added 1.4% and ended Monday at a record high as strong retail sales underscored US economic strength, the Dow Jones rose by 1% and the Nasdaq 100 gained 1.6%.
Oil continued to rise despite Omicron's rapid spread, supported by supply disruptions and expectations of a drop in US inventories last week.
Brent crude oil grew by 1.5% to $79.75 a barrel, but it is trading near $74 as of 3:30 pm GMT.
Meanwhile, the safe-haven yen fell to a one-month low of 114.94 per dollar and was the last small change of the day.
The US dollar, also being a safe haven, fluctuated in an acceptable range due to the encouraging retail sales report.
The dollar index, which measures the currency against six major currencies, was just below parity at 96.02. The pound rose by 0.1% to a new five-week high. The euro little changed, and the risk-sensitive Australian dollar gained 0.2%.
Bitcoin fell below $50,000 by 3%.
In debt markets, US 10-year Treasury bond yields remained below Thursday's high of just above 1.5%. German 10-year bond yields, the benchmark for the eurozone, added 2 basis points to -0.226%.
Spot gold rose by 0.3% to its record high in one month at $1,816.60 an ounce due to a weaker US dollar.
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