European Stock Exchanges: Investors Monitor Omicron Developments

LONDON – European markets ended the day in mixed territory after a thin trading session on Christmas Eve, as traders closely watched the latest developments around the omicron variant Covid.

London’s FTSE 100 ended the day up 0.2%, while France’s CAC ended down 0.3%. Markets in Germany, Italy and Switzerland were closed to mark the Christmas holidays.

It comes as market participants juggle concerns over coronavirus restrictions and tighter central bank policy with signs that the heavily mutated omicron strain of the virus is milder than earlier variants like delta.

New studies in South Africa and the UK this week suggest omicron has a reduced risk of hospitalization and serious illness.

According to South African research, which is not peer-reviewed, people infected with omicron are 80% less likely to be admitted to hospital compared to other variants. However, the authors said this could be partly due to higher immunity in the population, while South African health officials warned that the data should not be extrapolated to all countries.

A separate study in Scotland, also non-peer-reviewed, suggests that omicron is two-thirds less likely to result in hospitalization compared to delta. The UK Health Safety Agency confirmed the findings on Thursday, saying someone with omicron was 50-70% less likely to be admitted to hospital.

Governments are looking for clues about the severity of the new variant, which is spreading in many countries much faster than previous mutations. Authorities fear the health system will come under huge strain over the winter period amid what is now the fourth wave of infections.

Traders are also pricing in the potential for tighter liquidity in 2022, with the Federal Reserve targeting an aggressive reduction in its huge stimulus package and three rate hikes.

The Bank of England is also taking a hawkish approach, becoming the first major central bank to raise interest rates since the start of the pandemic, while the European Central Bank is more cautious.

In Asia, markets were mixed on Friday. Some major markets in the region, including Hong Kong and Singapore, close early for Christmas Eve.

US markets are closed Friday for the Christmas holidays.

In corporate news, HSBC said it bought the mutual fund arm of India’s L&T Finance Holdings for $425 million, in a bid to capitalize on India’s growing asset management market. Shares of the British lender edged higher on the news.