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European Stock Futures Higher; Global Recovery Continues

 European stock markets are expected to open marginally higher Thursday, continuing the global rally amid growing confidence that the global economic recovery will survive the surge of Omicron variant cases.

At 2 AM ET (0705 GMT), the DAX futures contract in Germany traded largely flat, CAC 40 futures in France climbed 0.4% and the FTSE 100 futures contract in the U.K. rose 0.5%.

Equity indexes in Asia have largely traded higher Thursday, a third consecutive session of gains, following on from the strong close on Wall Street overnight. This positive tone is expected to continue in Europe as investors breathe a sigh of relief on the back of positive signs about the impact of the omicron variant of Covid-19 as the year comes to an end.

A couple of studies released Wednesday, one from the National Institute for Communicable Diseases and major universities in South Africa and another from Imperial College London, suggested reduced risks of hospitalization and severe disease in people infected with the Omicron coronavirus variant versus the Delta one, the previous dominant strain.

New data from the U.K. Health Security Agency on the severity of the Omicron variant is set to be published later Thursday. 

Adding to the positive tone was U.S. consumer confidence improving further in December, suggesting the U.S. economy, the world’s main driver, continues to recover strongly. Earlier Thursday, Japan upgraded its growth projections for the next fiscal year starting in April, expecting the fastest growth since fiscal 2010.

That said, gains are likely to be limited Thursday with many investors on holiday and with the Omicron variant causing infections to double in 1.5 to 3 days, according to the World Health Organization. The U.K. recorded over 100,000 daily cases on Wednesday for the first time ever.  

In corporate news, Swiss building materials company Holcim (SIX:HOLN) said it was aiming to buy residential roofing maker Malarkey Roofing Products in a deal valued at $1.35 billion to expand into the growing U.S. residential roofing market.

Ryanair (LON:RYA) could also be in the spotlight after the budget airline late Wednesday doubled its full-year loss forecast, citing the emergence of new travel restrictions in several big markets.

Oil prices edged higher Thursday, helped by a sharp decline in U.S. crude stockpiles which suggests continued demand from the world’s largest consumer.

The Energy Information Administration reported late Wednesday that crude inventories declined 4.72 million barrels last week, the fourth consecutive weekly draw. This was even larger than the drop reported by the American Petroleum Institute on Tuesday, with the industry body indicating that crude stocks fell by 3.67 million barrels.

By 2 AM ET, U.S. crude futures traded 0.1% higher at $72.86 a barrel, closing Wednesday above $72 for the first time in two weeks, while the Brent contract rose 0.1% to $75.31. 

Additionally, gold futures rose 0.2% to $1,806.50/oz, while EUR/USD traded 0.1% higher at 1.1336.

 

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