European equities rose on Monday, following falls on Wall Street in the previous session, as debate about the Omicron coronavirus variant and the future direction of monetary policy kept trading conditions volatile.
The Stoxx 600 share index opened 0.7 per cent higher. London’s FTSE 100, which is dominated by economically sensitive banks, commodities producers and miners, rose 0.6 per cent. Futures contracts tracking Wall Street’s S&P 500 share index added 0.5 per cent while those tracking the technology-focused Nasdaq 100 were flat.
The moves came after investors on Friday retreated from shares in large US technology and other early-stage companies, whose higher valuations are sensitive to expectations of interest rate rises.
Non-farm payrolls data for November showed US employers added 210,000 workers last month, less than half the number economists polled by Reuters had expected to see, but also a significant fall in the unemployment rate to 4.2 per cent.
That report came days after Federal Reserve chair Jay Powell signalled his support for a quicker reduction of the central bank’s $120bn a month of bond purchases that have lowered borrowing costs and lifted stock valuations through the pandemic era.
“The weaker [jobs] print doesn’t change the likelihood of a faster taper as the Fed wants to signal inflation vigilance and retain maximum flexibility to hike [rates],” analysts at TD Securities said in a note to clients.
Last month, US consumer prices rose at their highest annual rate for 30 years.
The yield on the benchmark 10-year Treasury rose 0.04 percentage points to 1.375 per cent as the price of the debt fell. This key debt yield, which influences borrowing costs worldwide, traded at above 1.65 per cent in late November, before the World Health Organization declared Omicron a variant of concern.
On Sunday, top US health official Anthony Fauci called early signals about the severity of Omicron “encouraging,” telling CNN that while it was too soon to know the full consequences of the new variant, booster jabs would offer “maybe a considerable degree of protection”.
In Asia, Hong Kong’s Hang Seng index fell 1.8 per cent, with significant share price falls for large Chinese tech companies including Alibaba and Tencent. The Topix in Tokyo closed 0.5 per cent lower.
Brent crude, the international oil benchmark, rose 2.2 per cent to $71.37 a barrel.