Global Stocks Mostly Rise Amid Omicron Optimism

Stock markets mostly rose worldwide on Tuesday as investors appeared to ride a "Santa Claus rally" that was helped by optimism the Omicron coronavirus variant will not derail the global economic recovery.

Covid-19 cases have surged across the world, prompting governments to impose new measures to limit contagion while the travel industry faced thousands of flight cancelations.

Experts caution against too much optimism around early indications that Omicron causes less severe disease than previous strains, pointing out that it is spreading so fast it could still overwhelm health systems.

But investors seem to be reassured about its effects on the economy.

The US Centers for Disease Control and Prevention helped sentiment on Monday as it cut the isolation period for asymptomatic Covid cases in half to five days.

"That recommendation will reduce some of the pressure of staffing shortages, which in turn is feeding into the market's belief that the economic impact of the Omicron variant is going to be short-lived," said Briefing.com analyst Patrick O'Hare.

Frankfurt's DAX index finished 0.8 percent higher while the Paris CAC 40 closed at a record, rising 0.6 percent to 7,181.11 points. London was closed for a holiday.

On Wall Street, the S&P 500 edged lower, retreating from records, following a mixed session for US stocks in a week of low trading volumes and relatively light news flow.

"You don't have a trend going one way or the other," said Maris Ogg of Tower Bridge Advisors.

Stocks have been on the upswing over the last week as investors bet the latest Covid-19 strain will be less damaging than earlier strains.

Moody's economist Mark Zandi predicted the Omicron wave will dent growth in the first quarter, but "not have a material impact" on 2022 growth overall because a rebound later in the, he said in a note.

"Even after the Omicron wave abates, there will almost surely be others. But we expect each new wave to be less disruptive to the healthcare system and economy than the wave before it," Zandi said.

"An increasingly vaccinated population, booster shots, and new antiviral medications and therapies should help ensure that while many more people will get sick, there will be fewer hospitalizations and deaths."