Yahoo Finance European markets down as UK to turn football grounds into vaccine centres
European markets were down on Tuesday amid positive employment numbers in the UK and as the country turns football stadiums and racecourses into vaccine sites.
In London, the FTSE 100 (^FTSE) surged in the day but closed 0.1% lower. The French CAC (^FCHI) was down 0.6% and the DAX (^GDAXI) fell almost 1% in Germany.
After prime minister Boris Johnson confirmed the UK’s first death linked to the new Omicron COVID variant, the government announced it will open hundreds more vaccination sites in the coming days as it tries to ramp up delivery of booster shots.
Health secretary Sajid Javid said the new strain accounts for 20% of confirmed COVID-19 cases in England, while the estimated number of daily infections is about 200,000.
Meanwhile, latest data reveals the number of employees in the UK was up 257,000 in the month to 29.4 million in November. That’s 424,000 higher than pre-pandemic levels.
The employment rate from August to October was 75.5%, 1.1 percentage points above pre-pandemic levels.
Read more: UK job vacancies hit record high but Omicron could hit retail and hospitality hiring
The unemployment rate was 4.2%, up 0.2 percentage points from pre-pandemic levels, but down 0.4 percentage points from the previous quarter.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: "We’re not entirely out of the woods just yet, because some of those made redundant at the end of the scheme could be working their notice periods."
The positive numbers actually give "the Bank of England a completely different and equally painful headache."
On the one hand, it left rates untouched last month, specifically because it was concerned about the risk of unemployment. These fears have been allayed, and in the interim inflation has hit 4.2% and wage inflation is still running well above 4%.
On the other hand, she said: "A month is a long time during a pandemic and disappointing growth figures combined with growing fears of Omicron running rampant means it now has to worry about the fact that the fragile economy may not withstand a rate rise.”
Across the Atlantic, stocks took a major hit at the European close as investors anticipate a quicker end to the Federal Reserve's bond-buying scheme and price in between two to three rate hikes for 2022. US producer prices also soared to new record highs.
Read more: Rising energy costs slow UK recovery
The S&P 500 (^GSPC) fell 1.1%, and the tech-heavy Nasdaq (^IXIC) was down 1.8%. The Dow Jones (^DJI) slumped 0.3%.
The US Federal Reserve will soon meet for the last time in the present calendar year, and the outcome of the Federal Open Market Committee is highly awaited as investors are keen on listening to the plans of policy makers about the schedule of tapering the bond purchases.
"Although the Federal Reserve’s hawkishness is likely to cause a pullback in stock markets, we still expect global economic growth in 2022 to be robust and pave the way for higher returns in equity markets," said Naeem Aslam, chief market analyst at Ava Trade.
"Investors should understand that inflation is an important driver considered by the Federal Reserve before deciding its monetary policy. Hence, a rise in PPI is only going to support the Fed’s view of winding down its stimulus sooner."
Over in Asia stocks were down. In Japan, the Nikkei (^N225) closed 0.7% lower, while the Hang Seng (^HSI) was down 1.3% at close in Hong Kong. The Shanghai Composite (000001.SS) was also in the red, down 0.5%.
“Fresh jitters in the Chinese real estate market have renewed the uncertainty with the stock of Shanghai-headquartered Shimao Group Holdings sliding more than 12% as investors fear the financial position of the property developer,” said Kunal Sawhney, CEO, Kalkine Group
“Witnessing a contagion effect, the shares of debt-laden Evergrande Group (EGRNF) tumbled over 6%, making the markets more volatile”.
He said stock markets are likely to remain choppy as investors continue to contemplate the damage on the back of the Omicron variant
He added that the rate of unemployment in the United Kingdom falling “is likely to counterbalance partial anxiousness as the employment landscape continues to strengthen.”
