European stocks decline with the spread of Omicron

European shares closed lower as investors weighed the repercussions of a renewed rise in US inflation and risks from the rapid spread of the omicron variant of the coronavirus.

The Stoxx 600 closed 0.29% lower to settle at 475.61 points, paring weekly gains to 2.8% – the best weekly rise since mid-March.

The retail and technology sector was among the worst performers, followed by the leisure and travel sector.

While most European indices have regained some of the ground lost since the emergence of the micron was announced, they are still far from the records set last month, as investors await cues from central banks on both sides of the Atlantic. Next week, regarding the withdrawal of stimulus to the economy.

The announcement of inflation picking up again in the US increases pressure on the Federal Reserve to tighten monetary policy.

“Investors have chosen to be cautious in this last session of the week, especially after recent developments have shown that the penetration rate of the new omicron variant is even higher than that of the delta variant. Awaiting the next speech of ECB President Christine Lagarde”, confirms Pierre Verrett, technical analyst at ActivTrades .

European markets this week saw the biggest withdrawal of investment since October 2020, at $3.4 billion, according to a note from Bank of America, citing data from EPFR Global. This influx of funds led investors to invest their money in money market funds and large-cap US companies, according to the same analysis.

“Central bank meetings next week, geopolitical tensions and the omicron variable keep uncertainty at a high level,” Barclays strategists emphasized in a poll cited by Bloomberg.

Among the major indices in Western Europe, Germany’s Dax fell 0.1%, France’s CAC-40 fell 0.2%, Britain’s FTSE 100 fell 0.4%, Italy’s FTSEMIB lost 0.4%, Spain’s IBEX 35 fell 0.5 %, and in Amsterdam, the AEX index fell 0.5%.