‘Santa Claus’ rally under way in Europe as markets hit one-month high

European shares hit a one-month high on Thursday, led by gains in banking stocks as signs that the impact of the Omicron variant may be less severe than feared led to a greater appetite for risk among investors.

The favouring of riskier investments rather than safe-haven assets ahead of Christmas, a phenomenon typical of what is dubbed a “Santa Claus rally”, also nudged gold and oil higher.

Meanwhile, two further vaccine makers, AstraZeneca and Novavax, said their shots protected against Omicron as UK data suggested it may cause proportionally fewer hospital cases than the Delta variant.

DUBLIN

The Iseq rose 1.5 per cent on the last full day of trading before Christmas, with stocks advancing in line with the trend across Europe.

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Paddy Power owner Flutter Entertainment gained 2.8 per cent, closing at €137.00 after it announced the acquisition of Italian online gaming operator Sisal for €1.9 billion. The deal, expected to be completed in the second quarter of 2022, will give the company a bigger foothold in the Italian market.

Among the Dublin market's biggest stocks, building materials group CRH added 1.9 per cent to €45.94, while Ryanair was flat at €14.16. Bank of Ireland rose 2.5 per cent to €5.18 and AIB finished 1.9 per cent higher at €2.18.

Packaging group Smurfit Kappa was another gainer, closing up 2.2 per cent at €47.45, but Kerry Group slipped 0.8 per cent to €112.20 on light trading volumes and Glenveagh Properties dropped 0.65 per cent to about €1.22.

LONDON

The blue-chip FTSE 100 ended 0.4 per cent higher, extending its two-day rally, led by financial stocks with banks advancing 1 per cent as UK gilt yields picked up.

Gains on the benchmark index were capped by a weakness in dollar-earning companies such as British American Tobacco, which fell 1.9 per cent on a strong pound.

The FTSE 250 mid-cap index added 0.8 per cent, with the travel and leisure index among the lead gainers on easing concerns about Omicron.

UK businesses have reported their weakest growth since the country was under lockdown earlier this year and they expect a further slowdown in early 2022, the Confederation of British Industry said.

EUROPE

The pan-European Stoxx 600 gained 1 per cent, marking the third straight session of gains, boosted by banks and travel stocks, tracking a global share rally that was also helped by robust US economic data.

European government bond yields rose for the fourth consecutive session and benchmark US treasury yields rose to two-week highs.

Swiss building materials company Holcim gained 1.9 per cent after saying it would buy Malarkey Roofing Products for $1.35 billion (€1.19 billion) to expand into the growing US residential roofing market.

Continental added 2.5 per cent after its chief executive told a magazine that the German automotive supplier could hit the upper end of its profit margin outlook in 2021 as vehicle production picked up in the fourth quarter.

US

Wall Street’s main indexes rose in early trading as preliminary data suggested the Omicron variant of the coronavirus was less severe than feared, lifting the mood ahead of Christmas.

Casino operators Melco Resorts & Entertainment, Wynn Resorts and MGM Resorts rose between 1 per cent and 7 per cent, while the S&P 1500 airlines index advanced 0.8 per cent.

New York-listed shares of ecommerce company JD.com slumped 6.7 per cent after its largest shareholder, Tencent, said it would transfer its stake to shareholders.

In the US, the official definition of “Santa Claus rally” refers to the historically good performance of stocks in the last five trading days of December and first two of January, a period that begins on Wall Street on Christmas Eve. According to CFRA Research, the phenomenon has lifted equities in 56 out of 75 years since 1945.

– Additional reporting: Reuters