Stock markets are surging globally despite Omicron crisis. Here’s why

Indian shares surged for a fourth consecutive session on Wednesday, with gains witnessed across the board as Asian peers inched higher after Jerome Powell, the Federal Reserve Chair, sounded less hawkish than expected in a testimony to the US Congress on Tuesday. The comments seem to calm the nerves of investors amidst concerns around the new Omicron variant of coronavirus, which has been leading a surge in Covid-19 infection across the globe.

Powell reassured investors that the Fed will tackle inflation to extend the economic expansion. His response prompted gains in Asian stocks, and the United States and European futures.

Powell also said that monetary policy would return to normal and interest rates might be raised earlier than planned.

Also Read| Sensex climbs about 400 pts to reclaim 61K-level in early trade

According to news agency Bloomberg, shares in Hong Kong rose to the highest levels in five weeks. Shares in Japan also gained. While in China, technology stocks rallied as cheap valuations and the prospect of looser monetary conditions enticed buyers, Bloomberg further reported.

In India, Sensex on Wednesday morning went past 61,000 while the broader Nifty 50 of the National Stock Exchange was trading at 18,197.05 points, more than 141 points higher from Tuesday’s closing session at 18,055 points.

On the Sensex, UltraTech Cement, RIL, IndusInd Bank, Bharti Airtel, Kotak Bank and Tata Steel were among the major gainers on Wednesday.

Also Read| Over 50% of Europe’s population could be infected with Omicron in 6-8 weeks: WHO

This rise in the country’s stock market comes amid a massive surge in the cases of coronavirus disease (Covid-19) fuelled by the Omicron variant, which has infected nearly 4,900 patients till now. On Monday, India saw another spike in its daily Covid-19 tally with 194,720 cases in the last 24 hours, according to the Union health ministry. The active cases are nearing one million.

But, experts say that the risk is “manageable”. “Though Omicron cases are exploding in Europe and US, the market message is that it is a manageable risk. The short-term momentum reflects a market in complete control of the bulls,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Meanwhile, following Powell’s comments on Tuesday, US futures gained, indicating a firm open for US equities after the S&P 500 halted a five-day slide and the Nasdaq 100 outperformed.

(With agency inputs)

 

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