Stocks and oil drop as Omicron variant ‘clouds the outlook’

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The rapid spread of the Omicron coronavirus variant has led to re-imposition of regulations by governments across the continent, raising concerns about the global economy and lowering stock and oil prices.

The Pan-European STOXX 600 index fell 2.1% in the morning trading. Both the FTSE 100 in London and the Cac 40 in France fell by about 2%, while the Dax in Germany fell 2.5%. S & P 500 futures fell 1.8%, showing another significant setback after Wall Street’s benchmark stock barometer fell 1% on Friday.

The Netherlands on Sunday became the first EU country to re-enter the national blockade and close bars, restaurants and most non-essential stores until at least mid-January.

The German government tightened a travel ban over the weekend, but the British health minister did not rule out the need to bring curbs to the UK before Christmas, telling the BBC “it’s time to be more cautious.” I did. Meanwhile, Ireland has introduced a curfew for pubs and restaurants.

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Tatjana Greil Castro, co-head of Muzinich’s public market, said the market slip was likely due to the blockade caused by Omicron in both Europe and Asia, but in either direction. She added that pre-Christmas trading volumes are likely to be exaggerated at this time of the year.

Deutsche Bank strategist Jim Reed added that Omicron “has clouded the outlook towards the end of the year” and is “one of the biggest problems for the market today.”

Oil prices reflected those jitters. The international benchmark Brent fell 5.1% to $ 69.85 a barrel, while the US benchmark West Texas Intermediate fell 5.7% to $ 66.84.

“The horror caused by the pandemic has returned to the forefront of investor concern as the variants of the Omicron coronavirus surge,” said Stephen Brenock, a brokerage firm at PVM.

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Traders have also shifted to perceived shelter assets. US 10-year Treasury yields fell 0.04 percentage points to 1.37 percent, while comparable 10-year German Treasury yields fell 0.02 percentage points to minus 0.4 percent. The Japanese yen, which rose during times of market instability, rose 0.3% against the dollar to 113 yen.

Meanwhile, US growth prospects have been hit after Democratic senator Joe Manchin said he wouldn’t vote for President Joe Biden’s flagship, the Build Back Better Bill.

As a result, Goldman Sachs lowered its 2022 US gross domestic product growth forecast from 3% to 2% in the first quarter, from 3.5% to 3% in the second quarter, and from 3% to 2.75%. I did. number 3.

Manchin quoted the country’s existing debt levels, the re-emergence of Covid-19, and the rise in consumer goods prices due to the rejection of the bill.

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“If fiscal policy loses momentum [US Federal Reserve] Kit Jacks, a macro strategist at Societe Generale, said:

Meanwhile, China eased monetary policy by lowering its one-year prime rate on Monday.

“we [soon] Look at the more downward revisions to growth, “he added.

In Asia, Hang Seng Bank in Hong Kong fell 1.9% and Nikkei 225 in Tokyo fell 2.1%.

With additional report by Neil Hume

Stocks and oil drop as Omicron variant ‘clouds the outlook’ Source link Stocks and oil drop as Omicron variant ‘clouds the outlook’