World shares have extended their positive start to 2022 with markets from Europe to Asia shrugging off worries the Omicron coronavirus variant could choke the global economic recovery, while the dollar rose after US bond yields jumped.
The Euro STOXX 600 gained as much as 0.6 per cent in early trading, pushing beyond its all-time high of 489.99 points scaled a day earlier. Indexes in Germany, France and Italy all rose about 0.3 per cent.
Travel and leisure stocks jumped 2.7 per cent, with Ryanair adding 8 per cent and British Airways-owner IAG gaining over 9 per cent, reflecting expectations Omicron's impact on the industry would be less severe than initially feared.
"The chief reason behind the return of investor confidence is Omicron," said Jeffrey Halley, an analyst at Oanda.
"Yes, the virus variant is much more contagious, but it is not leading to a proportionally larger number of hospital admissions... (so) it won't stop the global economic recovery."
Wall Street was also set for gains after closing a day earlier at record highs, with e-mini futures for the S&P 500 index 0.2 per cent higher.
The US dollar rose to its highest since 2017 against the Japanese yen after US Treasury yields jumped on Monday as traders bet on an early Federal Reserve interest rate hike to tame fast-rising inflation.
Euro zone bond yields held steady near their highest levels in around two months.
In a sign that economies may weather the spread of Omicron, factory activity in Asia grew in December, suggesting the direct hit from the variant on output appeared subdued.
Asian stocks were on the front foot following Wall Street's record highs on its first trading day of 2022, with MSCI's gauge of Asia Pacific stocks outside Japan notching up gains of 0.5 per cent.
Analysts said the gains for stocks reflected in part optimism over prospects for the US economy. "We are firmly of the view the US is seeing boom conditions and a very tight labour market which will boost household incomes," said John Milroy, an Ord Minnett advisor in Sydney.
Major Wall Street indexes closed at record highs on Monday, with Apple Inc becoming the first company to reach a $3 trillion market value.
The S&P index surged nearly 28 per cent last year, driving MSCI's 50-country index of world stocks to its third consecutive year of double-digit gains.
The index was up 0.3 per cent on the day.
Benchmark US 10-year yields leapt 12.5 basis points on Monday to touch 1.6420 per cent for the first time since Nov. 24, as investors bet on a series of interest rate raises this year to combat rising inflation.
Money markets have fully priced in a first US rate increase by May, and two more by the end of 2022.
That pushed the dollar to as high as 115.82 yen for the first time in four years.
The dollar index, which measures its performance against the yen and five other major currencies, held close to the one-week high of 96.328 reached a day earlier.
Commodity markets also were back in the swing of things after their nearly two-year resurgence to close out 2021, though oil gave up most of its earlier gains.
Brent crude futures were up 0.1 per cent at $79.05 a barrel at 0810 GMT, as investors embraced expectations that major oil producers will confirm a plan to add supply.
Australian Associated Press
