European stocks tick up after record Wall Street close

Shares in Europe and Asia rose in morning trading on Tuesday, taking their cue from another record high overnight on Wall Street, but turning to defensive stocks while the impact of the Omicron coronavirus variant was unclear.

The European benchmark Stoxx 600 rose 0.5 per cent, towards a five-week high, led by utility and healthcare stocks. Prosus and Just Eat Takeaway were among the biggest fallers, down 2.7 per cent and 2.5 per cent respectively.

The impetus was provided from Wall Street, where the broad-based S&P 500 share index hit a fresh all-time high on Monday. Trading in futures indicated further gains at the open in New York with the S&P expected to rise 0.3 per cent and the technology-focused Nasdaq 100 index 0.5 per cent.

The late end-of-year rally has followed weeks of volatility driven by Omicron and the US Federal Reserve moving to reduce its emergency stimulus measures.

“Last week’s gain of over 3 per cent marked the Nasdaq’s fifth straight weekly move of more than 2.5 per cent in either direction, which is the longest streak in over 10 years,” said analysts at Bespoke Investment Group in New York.

However investors have begun to question the durability of the rally in to next year with inflation and energy prices rising.

Investors saw the positive side of news that neither England nor France would impose tighter coronavirus restrictions for New Year’s Eve. Nevertheless France toughened working-from-home rules to stem a surge in Covid-19 cases.

The Cac 40 share index in Paris moved 0.4 per cent higher and the Dax 40 in Frankfurt rose 0.6 per cent. Still, trading was light during the festive period. The London market was closed and will reopen on Wednesday.

In Asia, Hong Kong’s Hang Seng gauge rose 0.2 per cent while Japan’s Nikkei 225 rose 1.4 per cent.

Crude oil remained close to a one-month high as investors bet that demand would not be deeply curbed by the Omicron variant. Brent crude, the global benchmark, rose 1.5 per cent to $79.74 a barrel while WTI, the American benchmark, was up 1.6 per cent at $76.76.

The dollar index, which measures the US currency against six others including sterling and the euro, slipped 0.09 per cent.

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