Europe close: Stocks cling to gains in year's penultimate session
European shares managed to cling to positive territory on 2021’s penultimate day on Thursday, taking a cue from Wall Street’s sixth successive positive session overnight despite a continuing surge in Omicron cases.
The pan-European Stoxx 600 was up 0.2% at 488.97, with regional bourses in the green as well, as Frankfurt’s DAX finished a truncated day 0.21% higher at 15,884.86 and the CAC 40 in Paris last sitting 0.16% above the waterline.
London equities did not fare quite so well, however, with the FTSE 100 closing down 0.24% at 7,403.01, while the FTSE 250 eked out gains of 0.1% to 23,539.55.
Traders in Italy, Germany, and Spain will enjoy New Year’s Eve off on Friday, while Paris and London will trade for half a session.
“With the new year closing in, we have seen markets gradually grind higher on low volumes,” said IG senior market analyst Joshua Mahony.
“Market sentiment continues to straddle fears of near-term Covid restrictions and expectations of a swift recovery, with value and growth names fluctuating as a result.
“Nonetheless, the move towards higher rates and higher yields should bring a rare period of outperformance for value names once the Omicron wave starts to subside.”
Fears around the severity of the Omicron variant of Covid-19 continued to fade in the minds of market participants, even as case numbers soared globally and countries such as the UK found themselves with shortages of testing kits, despite assurances that supplies were plentiful.
US shares received a boost from better-than-expected retail sales data overnight, and an unseen fall in US crude oil and gasoline inventories.
On the economic front on Thursday, UK house prices recorded a bigger-than-expected rise in December, marking their strongest year since 2006, although mortgage lender Nationwide warned there could be a cooling in the new year.
Prices in December increased by 1% month on month - compared with forecasts of 0.5% - driven by strong demand, the stamp duty tax break, and a shortage of homes on the market.
December house prices were up 10.4% year-on-year, and the average price of a property stood at a record high of £254,822.
"It appears likely that the housing market will slow next year, since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax," Robert Gardner, Nationwide's chief economist, said.
"Even if wider economic conditions remain resilient, higher interest rates are likely to exert a cooling influence.
“Indeed, house price growth has outpaced income growth by a significant margin over the past 18 months and, as a result, housing affordability is already less favourable than before the pandemic struck.”
Across the pond, US weekly jobless claims came in at 198,000 for the week ended 25 December, below expectations of 208,000.
The reading from the Labor Department followed last week's print of 206,000, revised up from 205,000.
Continuing claims dropped sharply to 1.72 million in the week ending 18 December, which was well below expectations for a small rise to 1.87 million and down from the previous week's downwards-revised 1.86 million.
In equity news, airline shares were mixed after their US counterparts fell overnight, as concerns Omicron would cause staff shortages led to more flight cancellations.
Wizz Air slipped 0.14%, while Ryanair reversed earlier losses to rise 0.42%, and British Airways and Iberia owner IAG was broadly flat, rising just 0.01%.
Siemens Gamesa rose 1.15% after reaching a supply deal for wind turbines in Sweden.