World stock markets recovered Tuesday from a fierce Omicron-fuelled selloff, but natural gas prices spiked to record peaks and fanned global inflation worries.
Markets in Asia, Europe and the United States were on the front foot, as investors clawed back Monday's losses that were sparked by concerns over the fast-spreading Omicron coronavirus variant.
Stocks and oil prices trod higher as bargain-buyers moved in, though investors remain fixated on latest Covid-19 strain and moves to contain it over the Christmas and New Year holidays.
Gas prices however jumped to all-time highs on winter demand concerns and simmering geopolitical tensions between key supplier Russia and consumer nations, ringing inflation alarm bells for investors.
"Traders may be in holiday mode but this is having no dampening effect on the markets, which are continuing to see plenty of volatility as we near the end of the year," OANDA analyst Craig Erlam told AFP.
"Naturally Omicron and all of the headlines that come with it is playing a huge role, not to mention last week's plethora of interest rate decisions and the political circus in Washington," he added.
Festive volatility
With many investors on the side-lines for the holidays, liquidity is low in indices, which can accentuate market swings.
Sentiment was also jarred by news that Europe's reference Dutch TTF gas price soared 27 per cent to hit 187.785 euros per megawatt hour in afternoon deals, while UK prices leapt to 470.83 pence per therm.
"Inflation is already soaring and a growing concern for central banks, and higher gas prices will only exacerbate the move further, which could increase the squeeze on households and businesses," Erlam said.
The rise in gas prices and the latest wave of Covid cases come just as central banks around the world begin to remove the ultra-loose monetary policies put in place at the start of the pandemic to protect economies from the ravages of lockdowns.
Combined with the Omicron variant that is sweeping through populations and forcing governments to reimpose antivirus measures, the global economy faces a myriad of threats.
"I expect the markets to remain choppy and won't be surprised to see indices turn lower again," said ThinkMarkets analyst Fawad Razaqzada.
In New York, Wall Street shrugged off three consecutive down sessions as President Joe Biden unveiled steps to contain Covid-19 and expressed optimism about his domestic agenda.
In a televised address, the president formally announced a raft of new measures to combat the winter Covid-19 surge, including shipping half a billion at home tests, while imploring unvaccinated Americans to get jabbed.
Biden also said he remains hopeful he can secure Senate passage of his $1.75 trillion Build Back Better plan, and believes he can ultimately win support from crucial Democratic Senator Joe Manchin, who said Sunday he would vote "no" on the current incarnation of the proposal.
Key figures around 2030 GMT
New York - Dow: UP 1.6 per cent at 35,492.70 (close)
New York - S&P 500: UP 1.8 per cent at 4,649.23 (close)
New York - Nasdaq: UP 2.4 per cent at 15,341.09 (close)
London - FTSE 100: UP 1.4 per cent at 7,297.41 (close)
Paris - CAC 40: UP 1.4 per cent at 6,964.99 (close)
Frankfurt - DAX: UP 1.4 per cent at 15,447.44 (close)
EURO STOXX 50: UP 1.6 per cent at 4,174.99 (close)
Tokyo - Nikkei 225: UP 2.1 per cent at 28,517.59 (close)
Hong Kong - Hang Seng Index: UP 1.0 per cent at 22,971.33 (close)
Shanghai - Composite: UP 0.9 per cent at 3,625.13 (close)
Euro/dollar: UP at $1.1284 from $1.1279 late on Monday
Pound/dollar: UP at $1.3265 from $1.3207
Euro/pound: DOWN at 85.04 pence from 85.40 pence
Dollar/yen: UP at 114.09 from 113.61 yen
Brent North Sea crude: UP 3.4 per cent at $73.98 per barrel
West Texas Intermediate: UP 4.5 per cent at $71.12 per barrel
