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European stocks climb with dollar; treasuries fall: markets wrap

Most stocks rose Thursday as traders bet the global recovery will be resilient to the new virus strain that is spreading around the world. 
Image: Noriko Hayashi/Bloomberg

Most stocks rose Thursday as traders bet the global recovery will be resilient to the new virus strain that is spreading around the world.

Telecommunication shares led an increase in Europe’s Stoxx 600 Index, while energy companies fell. MSCI Inc.’s gauge of Asia Pacific equities advanced for a third day, led by Hong Kong and China, where policy makers are seeking to shore up the economy. US contracts slipped after the S&P 500 and the technology-heavy Nasdaq 100 extended a rally.

The British pound touched the lowest this year as Goldman Sachs Group Inc. pushed back its forecast for a UK rate hike amid the uncertainty from omicron. UK business groups called for government support after Prime Minister Boris Johnson announced restrictions to curb the spread of the variant, which Bloomberg Economics estimates could cost the economy as much as 2 billion pounds ($2.6 billion) a month.

The dollar rose and crude held, while Treasuries declined. China’s central bank set its reference rate for the yuan at a weaker-than-expected level against the dollar, signaling its discomfort with the currency’s recent rally.

Among individual moves, shares of LPP, Poland’s biggest clothes retailer, and British bootmaker Dr. Martens Plc rose after reporting earnings. Meanwhile, Zur Rose Group AG dropped after offering shares at a discount and Electricite de France fell after Le Figaro said the government is considering additional steps to keep electricity prices from rising too much amid a spike in energy costs.

The global equity rally will be tested as traders expect more volatility until there’s more clarity on the omicron variant’s threat to the economy, and ahead of US consumer inflation numbers this week and a Federal Reserve meeting next week that may provide clues on the pace of tapering and interest rate increases.

“We are looking to potentially have a rise in volatility even if the market continues higher around those events next week,” said Frances Stacy, Optimal Capital portfolio strategist, on Bloomberg Television. “Many of the catalysts that gave us this boom out of Covid are slowing. And then you have the Fed potentially tapering into a decelerating economy.”

In China, factory inflation eased, suggesting there is more room for measures to support the economy. Meanwhile, the nation’s indebted developers remain under scrutiny. Fitch Ratings cut property developers China Evergrande Group and Kaisa Group Holdings Ltd. to restricted default.

On the virus front, a study found omicron is 4.2 times more transmissible than the delta variant in its early stages.

Bloomberg’s Markets Live team is running a survey on asset views for 2022. It’s anonymous, takes about 2 minutes, and the results will be shared in the latter part of December.

Here are some key events to watch this week:

  • Federal Reserve Bank of Minneapolis President Neel Kashkari speaks Thursday
  • US CPI Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.2% as of 8:46 a.m. London time
  • Futures on the S&P 500 fell 0.2%
  • Futures on the Nasdaq 100 fell 0.1%
  • Futures on the Dow Jones Industrial Average fell 0.2%
  • The MSCI Asia Pacific Index rose 0.7%
  • The MSCI Emerging Markets Index rose 0.4%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1%
  • The euro fell 0.2% to $1.1322
  • The Japanese yen rose 0.2% to 113.48 per dollar
  • The offshore yuan was little changed at 6.3439 per dollar
  • The British pound was little changed at $1.3206

Bonds

  • The yield on 10-year Treasuries declined two basis points to 1.50%
  • Germany’s 10-year yield declined two basis points to -0.33%
  • Britain’s 10-year yield declined four basis points to 0.74%

Commodities

  • Brent crude was little changed
  • Spot gold was little changed
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