Markets rose on Wednesday as investors evaluated the potential for economic recovery against fears over the rapidly spreading Delta virus subtype and China’s regulatory crackdown.

Following the latest record close for the S&P 500 on Wall Street on Tuesday, European and Asian stock markets mainly advanced.

While markets have celebrated recent solid company earnings, there is rising concern about the Delta variant, which has pushed countries to reimpose severe containment restrictions.

“It doesn’t take much to jolt the markets, and there are lots of reasons to stay cautious, such as many stocks selling at exorbitant valuations and the Delta issue continuing to cause disruption,” said Russ Mould, investment director at AJ Bell.

The greatest source of concern is China, the world’s second largest economy, where millions of individuals have been placed under house arrest.

After the disease first arose in Wuhan in late 2019, the country reduced domestic instances of the coronavirus to nearly nil, but it is now facing its largest outbreak in months.

“While China’s determination to limit outbreaks has been amply demonstrated, markets will continue to monitor the outbreak given the high transmissibility of the Delta variety,” said Tapas Strickland of National Australia Bank.

“There is also fear that China’s local vaccinations are ineffective against the Delta variant.”

Oil prices were steady Wednesday, despite recent volatility and predictions that China’s oil demand would fall as a result of the stringent new lockdown measures.

Meanwhile, investors are concerned about China’s crackdown on a variety of industries, including technology, private education, and real estate.

After a state-run media item referred to online games as “spiritual opium,” there is concern that gaming companies will be next.

Tencent, which has been battered by recent government initiatives, climbed more than 2% on Wednesday on bargain-hunting, albeit it is still down more than 20% since the beginning of last month.

Alibaba, another company caught up in the regulatory whirlwind, dipped slightly after reporting that revenue fell short of projections for the first time in two years.