LONDON, Dec 7 Reuters- Waning Omicron COVID 19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds.
Since February, the FTSEurofirst 300 index saw record bounces from some of China's biggest firms, including Alibaba and Baidu, on track for its first back-to-back run of plus 1% gains.
The risk-on mood also helped the dollar climb against safe-haven currencies such as the Japanese yen, which had lost 0.6% overnight, as the confidence-sensitive Australian dollar found buyers.
Safe-harbour government bonds went the other way with yields - which move inverse to bond prices - up 2.5% on Germany's benchmark 10 year Bund after falling to a three-month low on Monday.
Reports in South Africa said Omicron cases there had only shown mild symptoms, and the top U.S. infectious disease official, Anthony Fauci, told CNN it does not look like there is a great degree of severity so far.
Good news relating to the severity of Omicron should be taken with a pinch of salt. In a note from ING, researchers said that faster transmission could offset the benefits of milder symptoms. Even if markets are starting to display Omicron fatigue, it is still early days. After China injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve, the gains came as a result of the central bank cutting the amount of cash that banks must hold in reserve.
As Evergrande sank on the brink of default again, there was still uncertainty about its property sector, but data showing a stronger import growth was a positive sign of the strength of domestic demand, according to Adam Cole, analyst at the RBC.
Australia's S&P ASX 200 rose 0.95%, while Japan's Nikkei advanced 2.1% as risk-on sentiment pushed markets higher.
The main Asia ex-Japan benchmark of MSCI has lost about 5% this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks have outperformed.
Evergrande's shares rose by 1.7% after hitting a record low on Monday, as markets waited to see if the real estate giant has paid $82.5 million with a 30 day grace period coming to an end.
The markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.
While epidemiologists have warned against premature conclusions on Omicrons, markets arguably believed last week's brutal sell-off should have been milder, said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
Early assessments of Omicron cases have been declared mild, spurring half-full relief. The Federal Reserve is expected to accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market, which is why it is so important to support the dollar in FX markets.
Oil prices jumped by another 2% to $74.60 a barrel, adding to a nearly 5% rebound the day before, as concerns about the impact of Omicron on global fuel demand eased.
The price of copper went up while the price of gold was steady at $1,778. Expectations of U.S. consumer price data later this week will show an increase in inflation, according to 5 per ounce.