Stock markets mostly retreated yesterday as a “Santa Claus rally” showed signs of fatigue amid lingering fears over the Omicron variant and uncertainty about economic prospects for 2022.

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.

Oil prices dropped yesterday, while the dollar steadied against major rivals.

Warnings from the World Health Organization that the risk from the variant remains “very high” have compounded the sense that the pandemic is far from over, although data showing a reduced risk of hospitalization has lifted spirits.

“With market activity much reduced for the holiday season, investors continue to tentatively price in a global recovery hitting a minor bump, and not a pothole,” noted Jeffrey Halley, senior market analyst at OANDA trading group.

Reflecting the uncertainty, Tokyo closed lower in thin holiday trade yesterday, with the market weighed down by US futures losses. The 225-issue Nikkei Stock Average finished down 162.28 points, or 0.56 percent, from Tuesday at 28,906.88.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange ended 6.03 points, or 0.3 percent, lower at 1,998.99.

Declining issues were led by rubber product, food and electric appliance stocks.

The Nikkei opened nearly flat and was in negative territory for most of the trading session after on Tuesday it logged its highest close since November 25.

Technology issues that led to Tuesday’s gains encountered a sell-off, especially because market participants locked in gains, brokers said.

But London rose in midday deals, as the benchmark FTSE 100 index resumed trading after a long holiday weekend.

UK traders were catching up with gains across eurozone indices on Tuesday.

China’s main stocks index fell in a slide analysts attributed partly to losses for major liquor brands — including Kweichow Moutai, one of the world’s biggest drinks companies.

The benchmark Shanghai Composite Index lost 0.91 percent, at 3,597 points.

The Shenzhen Component Index closed 1.24 percent lower at 14,653.82 points.

The combined turnover of stocks covered by the two indices stood at 997.3 billion yuan (US$156 billion), down from 1 trillion yuan the previous trading day.

The medical equipment sector led the gains, while those related to the electricity sector led the losses. Expectations the central bank will add further stimulus measures in 2022 offered some hope.

Trading volumes remain thin going into the new year, when prospects for global growth and the long-term impact of the Omicron variant are expected to become clearer.

Moody’s economist Mark Zandi said in a note the Omicron wave would dent growth in Q1, but “not have a material impact” on 2022.

“Even after the Omicron wave abates, there will almost surely be others. But we expect each new wave to be less disruptive,” he said.