Stocks drift, oil drops as Omicron concerns linger

World stocks were flat and oil prices eased in quiet trade on Monday as flight cancellations over Christmas revived concerns that the Omicron coronavirus variant could slow the economy heading into the new year.

U.S. airlines have cancelled or delayed thousands of flights over the past three days due to COVID-19-related staff shortages, while several cruise ships had to cancel stops after outbreaks aboard.

In Asia, China reported its highest daily rise in local COVID-19 cases in 21 months over the weekend as infections more than doubled in the northwestern city of Xian, the country’s latest hotspot.

France hit another infection record on Friday, prompting the government to convene a special meeting on Monday which could trigger new restrictions on movement.

World shares were little changed by 1340 GMT as gains in Europe were offset by earlier weakness across Asian markets, although some investors were confident a global recovery would regain steam next year.

Megacap companies helped U.S. stock index futures edge up, while airlines and travel stocks fell pre-market.

Next year markets would also have to contend with other issues, ranging from inflationary pressures to policy tightening and geopolitical risks.

The pan-European STOXX 600 equity benchmark was up 0.4% at its highest level in over a month, helped by gains in defensive sectors, while Japan’s Nikkei ended 0.4% lower and South Korea’s Kospi dropped 0.4%.

Mainland Chinese shares weakened, with Shanghai’s benchmark sliding 0.4% and an index of blue chips retreating less than 0.1%. That was despite property stocks getting a lift after China’s central bank vowed to promote healthy development of the real estate market.

Australia, Hong Kong and Britain were among the markets closed on Monday for holidays.

DOLLAR RANGEBOUND

Wall Street trading was set to resume after a holiday on Friday. U.S. stocks closed at record levels on Thursday amid signs that Omicron may cause a milder level of illness, even as the highly transmissible variant led to a surge in case numbers around the world.

E-mini futures pointed to a 0.3% rise for the S&P 500 when it reopens.

In debt markets, safe-haven U.S. Treasuries saw 10-year yields stay below Thursday’s high of just above 1.5%. Germany’s 10-year yield, the benchmark for the euro zone, hit a one-month high at -0.222% and was last up 1 basis point on the day.

In the foreign exchange markets, the dollar was rangebound, despite a hawkish turn at the Federal Reserve this month that saw policymakers signalling three quarter-point rate hikes next year.

The dollar index, which measures the currency against six major peers, was up 0.1% at 96.21, around the mid point of the trading range seen over the past few weeks.

Among risk-sensitive currencies, the Australian dollar fell 0.2% and the British pound gained 0.3%, while the euro fell 0.1%.

The Turkish lira fell as much as 8.4% against the dollar amid persisting concern over the country’s monetary policy, having rallied last week on state-backed market interventions.

In the crude market, U.S. West Texas Intermediate futures fell 1% to $73.08 a barrel. The contract did not trade on Friday because of the U.S. market holiday.

Brent crude was up 0.3% at $76.38 a barrel, after settling down 0.9% on Friday.

Gold was flat at $1,807.5 per ounce as the uptick in the dollar made bullion more expensive for holders of other currencies.

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