European stock markets advance despite Omicron threat
European stock markets climbed higher on Monday, struggling off concerns about the Omicron COVID-19 variant.
It came as German factory orders fell by 6.9% in October, much worse than expected by economists, following a 1.8% rise the month before.
Orders in Europe’s largest economy were also 1% lower than in October 2020, the first year-on-year drop since September 2020, as the country continues to struggle with rising COVID cases and government restrictions.
“While still early days, the evidence continues to support the notion that while Omicron is more transmissible it doesn’t appear to be more deadly with no deaths currently reported because of the virus,” Michael Hewson, of CMC Markets, said.
Nonetheless, markets appear to be becoming increasingly twitchy, whether it be over Omicron, or the ability of Europe to deal with its current problem with Delta.”
Traders will also be keeping an eye on a speech by Ben Broadbent, deputy governor of the Bank of England (BoE) later on Monday. They will be looking for hints about whether an interest rate rise is on the cards next week.
Watch: Will interest rates stay low forever?
Across the pond, S&P 500 futures (ES=F) were up 0.5%, Dow futures (YM=F) also gained 0.5%, and Nasdaq futures (NQ=F) were 0.3% higher as trade began in Europe.
Wall Street slid for the second week in succession last week, in a sign that suggests there may be further losses as we head towards next week’s Federal Reserve meeting.
“In the US, [there was] a switch to defensive stocks at the expense of the likes of the consumer discretionary and technology sectors, as investors sought refuge as the variant continued to spread,” Richard Hunter at Interactive Investor said.
It came as last week the non-farm payroll report significantly missed expectations at the headline level, while wages and labour participation rose.
Read more: Rising costs, falling GDP and capital crunch may derail UK’s recovery, CBI warns
Asian markets broadly fell in morning trading on Monday, tracking uncertainty over the Omicron variant and the future of Chinese tech firms on Wall Street.
In Japan, the Nikkei (^N225) fell 0.4% while the Hang Seng (^HSI) slumped 1.8% and the Shanghai Composite (000001.SS) dipped 0.5%.
Elsewhere, oil prices jumped over 2% after top exporter Saudi Arabia raised its crude prices despite the threat of Omicron to the recovery. Last week OPEC+ stuck with the plan to increase supplies by 400,00 barrels per day in January.
Watch: Costs and shortages hit UK’s economic growth outlook and Omicron could add further risk, CBI warns