Dollar slips, stocks rise as Omicron fears easing

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NEW YORK – The dollar eased and global stock markets traded slightly higher on Wednesday as investors became less concerned with the Omicron variant, but looking for direction after yesterday’s big rally in stocks and prices of the crude oil.

Shares closed lower across Europe as the three major US indices traded near breakeven, with drugmakers Pfizer and BioNtech saying a three-shot price of their COVID-19 vaccine had neutralized Omicron in a laboratory test.

The benchmark 10-year US Treasury yield rose for the third day in a row, surpassing 1.5% for the first time in a week, and gold prices were little changed as investors squarely positioned their positions ahead of the release of US consumer price data on Friday.

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Investors are carefully monitoring the effectiveness of existing vaccines on Omicron as well as their severity and degree of contagiousness, said Jeremy Leung, portfolio manager at UBS Asset Management in London.

“We also need to take into account the time needed to adapt the vaccine, which would determine if there is more disruption in the coming recovery,” Leung said, adding that Omicron could exacerbate the difficulties in the chain. supply.

“Rate expectations have recently fallen due to macroeconomic concerns and therefore have caused volatility in growth relative to value as well as general market volatility,” he said.

The MSCI All Country World Index rose 0.34%, but the broad STOXX Europe 600 Index closed down 0.44%.

On Wall Street, the Dow Jones Industrial Average slipped 0.09%, the S&P 500 gained 0.11%, and the Nasdaq Composite rose 0.43% on gains in the communications and healthcare sectors .

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The dollar slipped against several major currencies as easing concerns over Omicron helped support riskier currencies, with the Australian dollar rising 0.83%, on pace for a third consecutive session of gains.

The dollar index, which tracks the greenback against a basket of six currencies, fell 0.404% to 95.879. The euro rose 0.75% to $ 1.1347 and the yen rose 0.10% to $ 113.68.

The yield on 10-year US Treasuries rose 3.4 basis points to 1.514%.

Longer-term yields have fallen recently as investors weren’t sure what Omicron would mean for the economy, said Kevin Flanagan, head of fixed income strategy at WisdomTree.

“If Omicron fades into the headlines a bit, you will continue to see all Treasury yields rise as we move forward,” he said.

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The 10-year T-bill yield last week posted its largest weekly decline since June 2020 after Federal Reserve Chairman Jerome Powell took a more hawkish tone and Omicron worries rocked governments. markets.

The US central bank is due to hold its last policy meeting of the year next week, when an acceleration in the reduction of its bond purchases is widely expected.

London’s FTSE 100 and the British pound were knocked down by reports that Britain could implement tougher COVID-19 measures as early as Thursday.

Brent crude, the international benchmark, stabilized above $ 75 a barrel in choppy trading, taking a breather after strong gains earlier this week.

Brent crude futures rose $ 0.38 to $ 75.82 per barrel, while U.S. crude rose $ 0.31 to $ 72.36 per barrel.

US gold futures were virtually unchanged at $ 1,785.50 an ounce.

Shares of Chinese group Evergrande hit an all-time high after a missed debt payment deadline put the developer at risk of becoming the country’s biggest default. But analysts said the news had limited impact on the global market because it was already “well priced” by the market.

(Reporting by Herbert Lash, additional reporting by Elizabeth Howcroft and Joice Alves in London; Editing by Alex Richardson, David Evans and William Maclean)

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