Andrée Papuc | Bloomberg
Stocks looked set to fall in Asia on Monday amid uncertainty over the impact of the omicron coronavirus strain on the global economic reopening. Currency markets stabilized after Friday’s volatility.
Stock futures for Japan, Australia and Hong Kong fell. The S&P 500 had its worst post-Thanksgiving performance since 1941 last week, the fall in oil exceeded 10% and the yield on 10-year Treasuries fell the most since March 2020.
The dollar was stable against the yen and the euro early in the session. South Africa’s currency, where the variant was identified, rose 0.9% against the greenback. Bonds in Australia and New Zealand climbed.
Two South African health experts – including the doctor who first sounded the alarm about omicron – have suggested the variant has so far shown mild symptoms. The World Health Organization has called for caution, saying it will take time to assess the strain.
Last week, traders pushed back the planned timeline of a first 25 basis point rate hike by the Federal Reserve to July compared to June. Atlanta Fed Bank Chairman Raphael Bostic downplayed the economic risks of a new variant, saying he was prepared to cut asset purchases at a faster pace to control inflation.
Investors are trying to determine whether the omicron surge ends up being a relatively brief scare that markets will eventually rebound from, or a harder blow to the global economic recovery. The prospect of tightening monetary policy to cope with price pressures was already complicating the outlook.
“We really need more answers to determine the impact on growth,” said Priya Misra, global head of rate strategy at TD Securities. “Risky assets measure uncertainty. “
Moderna Inc.’s chief medical officer said a reformulated vaccine to combat the new strain may be available early in the new year.
Emerging markets will be in the spotlight after taking some of the biggest blows of nervousness from the virus. In China, a Peking University study predicted the nation would face a major surge in Covid on a scale greater than anything any other country has yet seen if it were to reopen in the same way than the United States
In cryptocurrencies, Bitcoin stabilized over the weekend and was trading around $ 56,400, after falling below $ 54,000 on Friday.
Peter Tchir, head of macro strategy at Academy Securities Inc., said he was monitoring emerging market currency and bond markets, and Bitcoin, “as leading indicators of potentially riskier assets to come.” .
For more market analysis, read our MLIV blog.
Some of the main movements in the markets:
- The S&P 500 fell 2.3% on Friday
- The Nasdaq 100 fell 2.1% on Friday
- Nikkei 225 futures fell 2.8% earlier
- Australian S & P / ASX 200 index futures fell 1.4% earlier
- Hang Seng Index Futures Shed 1.2% Earlier
- The Japanese yen was at 113.43 per dollar
- The offshore yuan was at 6.3970 to the dollar
- Bloomberg Dollar Spot Index fell 0.3% on Friday
- The euro was at $ 1.1306
- The 10-year Treasury yield fell 16 basis points to 1.47% on Friday
- Australian 10-year bond yield fell two basis points to 1.72%
- West Texas Intermediate crude fell 13% to $ 68.15 a barrel on Friday
- Gold rose 0.8% to $ 1,802.59 on Friday
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