Asian markets rose on Tuesday following strong gains on Wall Street as investors bet a surge in Covid-19 cases due to the fast-spreading Omicron variant would not derail the economic recovery.
The highly mutated strain has fuelled a massive increase in cases across the globe, with countries reviving lockdowns, thousands of flights cancelled and cruise ships returning to port with infected passengers.
But there is a “belief that Omicron is going to be a nuisance but not a dire strait for the global economy – at least not for long,” said Briefing.com analyst Patrick O’Hare.
Wall Street enjoyed strong gains, with the S&P 500 powering ahead 1.4% to a second straight record on Monday while the Dow and Nasdaq added at least 1%.
It was the start of a historically strong seven-day post-Christmas stretch known on trading floors as the “Santa Claus rally”: a period of low trading volumes and light news flow that usually sees stocks drift higher.
‘Santa Claus Rally’ Carries Over
The optimistic risk-on appetite carried over to Asia, with Tokyo leading the charge to close 1.4% higher while Singapore, Seoul, Jakarta and Kuala Lumpur were all well into positive territory.
Taipei, one of the top performers this year, added 0.8%. Sydney and New Zealand were still closed for the holiday break.
“Investors were comfortably buying back shares after watching US rallies,” said Yoshihiro Okumura of Chibagin Asset Management.
“Although investors are concerned about Omicron, they are also expecting an economic recovery next year,” Okumura said.
Shanghai recovered from early losses to end 0.4% higher while Hong Kong closed up 0.2% in a see-saw session as Macau casino stocks fell sharply after the gaming enclave reported its first Omicron case.
European markets also followed Wall Street’s lead with Frankfurt and Paris both up 0.2% in opening trade. London was closed for a holiday.
Oil futures rose in Asia, with benchmark WTI heading towards $76 and Brent closing in on $79 a barrel.
Key figures around 0830 GMT
Tokyo – Nikkei 225: UP 1.4% at 29,069.16 (close)
Hong Kong – Hang Seng Index: UP 0.2% at 23,280.56 (close)
Shanghai – Composite: UP 0.4% at 3,630.11 (close)
New York – Dow: UP 1.0% at 36,302.38 (close)
• AFP with additional editing by Jim Pollard