European Stocks Are Steady Ahead of Christmas on Thin Volumes

(Bloomberg) --

European equities were little changed near a one-month high ahead of the Christmas holiday amid thin trading volumes as traders considered studies that signaled omicron is less severe than other variants.

The Stoxx 600 Index was down 0.1% by 1:22 p.m. in London, with regional markets including Germany and Switzerland closed on Christmas Eve. The FTSE 100 Index ended Friday little changed, erasing earlier gains of as much as 0.4%. 

While equities got a boost after a U.K. government study concluded that omicron appears to be less severe, but more contagious than other Covid strains, the risk of further curbs weighed on sentiment. Prime Minister Boris Johnson urged caution during the holidays as he considers whether to tighten pandemic regulations next week, while Germany’s head of state issued a pandemic warning amid omicron’s spread.

European equities have seen a volatile end to the year as investors have weighed virus restrictions and central banks scaling back support against hopes that an economic recovery won’t be derailed. The benchmark rallied to the highest level in a month yesterday amid optimism that omicron appears less likely to lead to hospitalizations than the delta strain. 

“Every now and again you get news of a lockdown, you get news of a new variant, and markets take a swoon,” Alastair George, chief investment strategist at Edison Group, said by phone. “But if you actually assume that that pattern may repeat through 2022, but you’re going to avoid the worst kind of lockdowns - it’s a drag on the economy, yes, but it’s not something that’s going to knock everything off track,” George added.

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