European stocks hit record highs on first trading day in 2022 | Stock markets

European stocks hit record highs on day one of trading in 2022, with markets betting on a steady economic recovery despite the growing number of Covid-19 cases caused by the Omicron variant.

The European benchmark stock index, the Stoxx 600, hit a record intraday high of 491.73 points on Monday, surpassing its November high of 490.58, as global oil and stock markets rose. It then closed at 489.99, up 0.45%.

The Stoxx 600 jumped 22.4% last year, its second best annual performance in more than a decade, after the global rollout of Covid-19 vaccines and government stimulus spending encouraged investors to reinvest money in the markets.

The share price of airlines Lufthansa and Air France KLM were two of the biggest climbers in European stock markets after Citi analysts predicted that reopening travel routes to Asia could help bolster the market. besieged travel sector. Lufthansa shares rose by almost 8.9% to € 6.73 per share and Air France KLM by 4.9% to € 4.06.

Europe’s record start to the new year paved the way for US markets to continue their recovery in late 2021. The opening of the S&P 500 index, which climbed a record 47.7% on the year latest, was bolstered by a 9% jump in Tesla stock after the company’s quarterly shipments beat expectations.

In another boost to U.S. markets, global oil prices, which last year posted their biggest annual increase since at least 2016, resumed their ascent to $ 80 a barrel as fears surfaced at the end of the day. of last year regarding the impact of the Omicron variant wore off. The price of oil helped stocks of US oil majors Chevron and ExxonMobil climb 1% each.

Rising market optimism globally has triggered a drop in the price of gold, which is considered a “safe haven” commodity during times of stock market volatility. The spot price of gold was on track for its biggest single-day percentage drop in more than a month on Monday afternoon after the price fell 1.6% to $ 1,798.97 the ounce.

The London Stock Exchange (LSE), which lagged behind European and American rivals by climbing 14.3% last year, was closed on Monday for the New Year’s holiday. The FTSE 100 has been criticized as “Old-fashioned” due to its dearth of tech companies and an overabundance of oil and banking stocks. It remained 6.5% below its May 2018 high last year, while the US, German and French markets all hit record highs.

Sean Darby, a global equities strategist at Jefferies, said: “Although the Covid-19 variants have permeated the global economy, 2021 has been the year of records with many exchanges closing at or near record highs, while inflows to equities surpassed their largest accumulation on record. Looking towards 2022, we expect volatility to increase. “

Global oil markets are also expected to face continued volatility over the coming year as traders balance the risk that the Omicron variant blocks a rebound in demand for transportation fuels, against uncertain supplies from larger companies. oil producers of the world.

The price of oil fell at the end of 2021 following the discovery of the new variant, from just over $ 85 per barrel in October to just under $ 70 per barrel a month ago. However, analysts believe Brent crude could be on track to hit $ 90 a barrel in the coming year as Covid-19 restrictions continue to decline.

Tamas Varga, of oil broker PVM, said: “Infection rates are on the rise around the world, restrictions are being introduced in several countries, the airline industry, among others, is suffering, but investor optimism is overwhelming. tangible.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

“It appears that the current strain is producing less severe symptoms than its predecessors, which may well help us get through wave four of the pandemic. ”

The rise in the price of oil is expected to cause further financial hardship for desperate households in the UK, which must contend with record high gasoline pump prices and further increases in the cost of gas and electricity bills In the coming months.

UK households and businesses can expect to be hit by the highest rate of inflation in a decade, due to rising raw material costs and continued disruption of global supply chains, after the consumer price index reached 5.1% in November. The Bank of England has said inflation could peak at around 6% in April – three times its target rate of 2% – as energy bills are expected to nearly double from record levels this winter.

Comments are closed.