Global stocks fall on virus concern, tighter Fed policy

Beijing: Global stock markets and Wall Street futures tumbled Monday amid concern about the latest coronavirus variant and tighter Federal Reserve policy.
London and Frankfurt opened sharply lower. Shanghai, Tokyo and Hong Kong also fell at the start of a trading week that will be shortened by Christmas. Benchmark US oil fell by more than 3 per barrel.
The spread of the omicron variant has fuelled fears that renewed curbs on business and travel might worsen supply chain disruptions and boost inflation.
Omicron threatens to be the Grinch to rob Christmas, Mizuho Bank’s Vishnu Varathan said in a report. The market prefers safety to nasty surprises .
In early trading, the FTSE 100 in London fell 1.7% to 7,143.60 and the DAX in Frankfurt lost 2.4% to 15,155.71. The CAC 40 in Paris sank 2% to 6,787.68.
On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average lost 1.5%.
On Friday, the S&P fell 1% as traders took money off the table after the Fed indicated it would fight inflation by speeding up the withdrawal of economic stimulus. The index is 2% below its all-time high and up 23% for the year.
The Dow lost 1.5% and the Nasdaq composite, dominated by tech stocks, slipped 0.1%.
In Asia, the Shanghai Composite Index slid 1.1% to 3,593.60 after China’s central bank trimmed a key interest rate. The bank cut its one-year Loan Prime Rate to 0.05% but left the five-year rate and its main policy rate unchanged.
The cut is a small step toward easing monetary policy without changing efforts to reduce debt in real estate, Larry Hu and Xinyu Ji of Macquarie said in a report. Beijing’s use of multiple interest rates is confusing, substantially muting the signal” if only one is cut, they said.
The Nikkei 225 in Tokyo sank 2.1% to 27,937.81 and the Hang Seng in Hong Kong lost 1.9% to 22,744.86.
The Kospi in Seoul declined 1.8% to 2,963.00 and Sydney’s S&P-ASX 200 retreated 0.2% to 7,292.20.
India’s Sensex opened down 2.3% at 55,811.05. New Zealand gained while Southeast Asian markets retreated.
Traders had bid up airlines, cruise lines and other travel-related stocks on hopes omicron’s spread wouldn’t trigger more travel controls.
Sentiment has turned as the United States and other governments warn omicron is more pervasive than expected, prompting travel restrictions in some areas and cancellations of public events.
The US government warned Sunday of a possible surge of breakthrough infections as Americans travel for Christmas and the New Year holidays.

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