GLOBAL MARKETS – Global stocks drop amid Omicron uncertainty
Global stocks fell on Thursday, reversing gains from the previous session, as lack of information on the Omicron coronavirus variant left markets volatile, while crude oil futures extended losses. Global stock markets first abandoned fears about the new variant on Friday last week, and have since wavered as investors assessed the possible impact of countries imposing travel restrictions in response to concerns that Omicron could be more. contagious than the previous variants.
U.S. stocks started to rebound on Wednesday, but then fell after the first Omicron case was confirmed in the United States. The gauge of MSCI stocks around the world fell 0.09%.
The main US stock indices were mixed at the opening. The Dow Jones Industrial Average rose 149.84 points, or 0.44%, to 34,171.88, the S&P 500 gained 5.51 points, or 0.12%, to 4,518.55 and the Nasdaq Composite lost 16.77 points, or 0.11%, to 15,237.29.
The pan-European STOXX 600 index lost 1.62%. The information investors are waiting for is whether the spread of the virus is resulting in higher hospitalizations, and any comments from vaccine makers on the effectiveness of their vaccines against this variant.
Federal Reserve Chairman Jerome Powell also weighed on equity markets and flattened the U.S. yield curve, which said he would consider an earlier end to the Fed’s bond buying program, which could open the door to interest rate hikes sooner. In his second day of testimony in Congress on Wednesday, Powell reiterated that the US central bank must be prepared to respond to the possibility that inflation does not fall in the second half of next year.
“In the past, what we’ve seen is central banks using COVID as an excuse to stay accommodating, and what we’re seeing is central banks becoming hawkish despite growing concerns about COVID, so it’s a bit of a communication shift, “said Mohammed Kazmi, portfolio manager at UBP. The Omicron variant also reduced risk appetite, making safe haven bonds more attractive to investors.
The benchmark 10-year notes last rose 7/32 to return 1.4121%, down from 1.434% on Wednesday night. “A darker month of December is now looming, as risk-free trading dominates,” wrote Chris Beauchamp, chief market analyst at IG, in a note to clients.
Stock market volatility as measured by the Vix, known as the Wall Street “fear index”, reached its highest level since February on Wednesday, before easing somewhat Thursday. Oil futures fell after OPEC + agreed to go ahead with its planned January oil production increase of 400,000 barrels per day.
US crude recently fell 2.42% to $ 63.98 a barrel and Brent was at $ 67.31, down 2.27% on the day. Currency market volatility has also increased, with euro-dollar one-month volatility indicators below Monday’s one-year peak but still at high levels.
“Liquidity in some areas of the market is still pretty low as people grapple with this news and as we head into the end of the year a lot of it is really liquidity driven, resulting in a some volatility, ”UBP’s Kazmi said. “Even in the more liquid market of the US Treasury market, we’ve seen some pretty big moves at times with very little news.”
The dollar index fell 0.191%, with the euro up 0.21% to $ 1.1343.
(This story was not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)