(Bloomberg) — Asian stocks were steady Friday after U.S. shares reached an all-time high amid optimism that the economic recovery will shrug off the outbreak of the omicron virus strain.
Japan’s market fluctuated and China dipped. But casino firms rallied in Hong Kong on favorable results from Macau license-renewal hearings. Volumes have thinned and many markets are closed or operating with reduced hours on Christmas Eve.
Sentiment has been helped by economic data that painted a picture of solid U.S. growth, and a U.K. study suggesting omicron infections are less likely to lead to hospitalization. But the research cautioned the fast-spreading variant may still produce a significant number of serious cases.
Investors shifted from havens toward riskier assets. Treasuries and a dollar gauge slipped in U.S. hours, while crude oil pushed up toward $74 a barrel. Bitcoin was trading around $51,000 and at one point touched the highest in more than two weeks. There is no cash trading of Treasuries on Friday.
A global stock gauge is up some 3% this month, illustrating the equity market’s resilience in the face of risks from the coronavirus and moves to tighten monetary policy to quell high inflation. A background of receding central bank liquidity support could test markets next year.
“We certainly favor value into 2022 over growth, and are much more on the short duration side both when we look at equities and fixed income,” Cheryl Pate, portfolio manager at Angel Oak Capital Advisors LLC, said on Bloomberg Television.
She added that U.S. inflation could move still higher and that the Federal Reserve faces a delicate balancing act to check price pressures while maintaining the economic recovery.
Inflation Dangers
Former Treasury Secretary Lawrence Summers warned of a testing period for the U.S. economy in coming years, with the risk of recession followed by stagnation. Summers said the Fed had been late to spot the dangers of inflation.
Omicron “will create some slowdowns in the economy, perhaps some slowdowns of production which could add to inflation pressures in the short term,” Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, said on Bloomberg Television.
But that will fade and the economy will work its way through the situation, Christopher said.
U.S. Growth
The latest U.S. data showed that consumer sentiment improved, new home sales increased, durable goods orders beat forecasts and jobless claims signaled further labor market healing. But inflation-adjusted consumer spending stagnated, flagging risks from rapidly rising prices.
Elsewhere on the virus front, Merck & Co.’s Covid-19 pill was cleared by U.S. regulators, giving high-risk patients another at-home treatment option.
But doubts continue to swirl about the effectiveness of the vaccine made by China’s Sinovac Biotech Ltd. — one of the most widely used in the world — against omicron following the latest laboratory study.
United Airlines Holdings Inc. and Delta Air Lines Inc. are canceling around 200 Friday flights because of personnel shortages linked to the spike in omicron cases.
What to watch this week:
- Friday: U.S. markets are closed. U.K. markets close earlier
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- Japan’s Topix index was little changed as of 1:30 p.m. in Tokyo
- South Korea’s Kospi added 0.6%
- Australia’s S&P/ASX 200 index increased 0.4%
- Hong Kong’s Hang Seng index rose 0.1%
- China’s Shanghai Composite index lost 0.4%
- The S&P 500 index rose 0.6%
- The Nasdaq 100 index climbed 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $1.1329
- The Japanese yen was at 114.32 per dollar
- The offshore yuan was at 6.3758 per dollar
Bonds
- The yield on 10-year Treasuries advanced four basis points to 1.49%
- Australia’s 10-year yield fell one basis point to 1.58%
Commodities
- West Texas Intermediate crude rose 1.4% to $73.79 a barrel
- Gold was at $1,811.79 an ounce, up 0.2%
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