European equities wavered on Friday as dealers tracked Omicron news and awaited key US data, while oil prices surged after OPEC and other producers hinted at lowering output.
London stocks added 0.2 per cent in late morning deals after gains in Asia, while Frankfurt and Paris fell 0.1 per cent and 0.2 per cent respectively in early afternoon eurozone trade.
World oil prices won 2.5 per cent, extending Thursday’s gains after the OPEC+ group opened the door to cutting crude output should Omicron fallout cut energy demand.
The dollar traded mixed as traders waited on a US non-farm payrolls report to give the latest healthcheck on the world’s biggest economy.
“Investors are clearly still anxious about the Omicron variant, despite anecdotal evidence suggesting symptoms are less severe” than first thought, said Craig Erlam, analyst at Oanda trading group. “Heading into the weekend, when we could get more information on the new strain, it’s natural that we’re seeing more caution.”
Doctors in South Africa on Friday revealed there had been a spike in hospitalisations among young children after Omicron swept through the country but stressed it was too early to know if they were particularly susceptible. In the week since South Africa alerted the world of the new COVID variant, infections have spread faster than in the country’s three previous waves.
“Despite a ramp-up in cases and hospitalisations in South Africa, markets appear to be hopeful that this latest variant will have mild enough effects to avoid another bout of global lockdowns,” said IG analyst Joshua Mahony.
Global markets have whipsawed since the new COVID variant hit headlines seven days ago over concerns that it may be even more transmissible than the Delta strain and that vaccines may be less effective against it. However, the initial panic appears to have died down for now as various reports have said that while the strain could spread quicker, there were signs it could be less potent than the other variants and that existing vaccines would offer protection.
Eyes were also on the Federal Reserve, which, after months of saying the inflationary spike was temporary, has now turned its focus on keeping surging prices from running out of control by preparing to tighten interest rates. Boss Jerome Powell suggested this week the bank would likely speed up the phasing out of its bond-buying stimulus programme and then focus on lifting borrowing costs.
The Federal Reserve, which, after months of saying the inflationary spike was temporary, has now turned its focus on keeping surging prices from running out of control by preparing to tighten interest rates
Friday’s data release could potentially hasten any action. “A strong jobs report will be great for the economy – but piles further pressure on the Fed to tighten monetary policy and get domestic demand-driven inflation under control before more drastic action is needed,” added Erlam.
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