European stock markets mixed as Omicron caution prevails

·Business reporter
·3 min read
Streets of Amsterdam
Streets of Amsterdam during the first day of the lockdown in Dutch capital city. The Netherlands has become the first European nation to declare a full lockdown to fight the new Omicron variant. Photo: Nicolas Economou/NurPhoto via Getty Images)

European stock markets were mixed on Wednesday as investors continued to weigh up coronavirus restrictions, infection rates and the effects on the economy.

In London, the FTSE 100 (^FTSE) was treading water by noon trade, while the French CAC (^FCHI) gained 0.3% and the DAX (^GDAXI) was also 0.2% higher in Germany.

On Tuesday, markets rebounded strongly with London’s benchmark index reversing all its Monday losses thanks to the UK government holding fire on any lockdowns before Christmas. The decision came as the Netherlands continued its tighter restrictions to curb rising cases.

Dutch prime minister Mark Rutte announced the shutdown on Saturday evening, ordering restaurants, hairdressers, gyms, museums to close until at least 14 January.

“It is slowly being recognised that lockdowns are a crude tool which inflict considerable economic, social and mental health damage, which some in government thankfully appear to be slowly beginning to recognise, and yesterday’s market rebound appears to be a reflection of that realisation,” Michael Hewson of CMC Markets said.

“There is also the additional factor that this reluctance to impose new strict lockdown measures this side of Christmas, might be down to the fact that even if restrictions were imposed there is little likelihood, they would be observed by increasingly pandemic weary populations.”

Meanwhile, the UK economy recovered slower in the third quarter of the year despite the easing of coronavirus restrictions over the summer, and before the emergence of the Omicron variant.

According to the Office for National Statistics (ONS) on Wednesday, gross domestic product (GDP) growth was revised from 1.3% to 1.1% in Q3, with weaker performances from health and hairdressers, and the energy sector contracting more in September than previously estimated.

Watch: Rent rise puts pressure on almost 5 million UK families

Across the pond, S&P 500 futures (ES=F) were down 0.1%, Dow futures (YM=F) shed 0.2%, and Nasdaq futures (NQ=F) were trading flat lower as trade began in Europe.

Wall Street also enjoyed a decent rebound in the previous session, reversing a sequence of three days of losses led by the Russell 2000 and the Nasdaq.

Traders are awaiting US third quarter GDP, along with US Consumer Confidence for December. The previous iteration of US Q3 GDP saw a modest upward revision from 2% to 2.1%, which is not expected to change in today’s final adjustment.

It was widely expected that the US economy would slow in Q3 from the 6.7% in Q2, however instead of slipping to 2.6%, it slipped back to 2%.

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Investors will also be keeping an eye on developments in Washington after president Joe Biden looked to reassure investors by calling for vaccinations and testing but invoking no travel curbs in response to the new strain.

Asian markets mostly rose on Wednesday, extending a global rally as investors assess the impact of the fast-spreading Omicron variant.

In Japan, the Nikkei (^N225) climbed 0.2% while the Hang Seng (^HSI) gained 0.4% in Hong Kong, and the Shanghai Composite (000001.SS) dipped 0.1% on the day.

Watch: Gillian Keegan says there are currently 129 in people in hospital with Omicron

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