Global stock markets and Wall Street futures fell on Monday amid concerns over the latest variant of the coronavirus and tighter Federal Reserve policy.
London and Frankfurt opened sharply lower. Shanghai, Tokyo and Hong Kong also fell at the start of a stock market week that will be cut short by Christmas. US benchmark oil fell more than $ 3 a barrel.
The spread of the omicron variant has fueled fears that new restrictions on business and travel could worsen supply chain disruptions and spur inflation.
âOmicron threatens to be the Grinch to steal Christmas,â Mizuho Bank’s Vishnu Varathan said in a report. The market “prefers security to unpleasant surprises”.
In early trading, the FTSE 100 in London fell 1.7% to 7,143.60 and the DAX in Frankfurt fell 2.4% to 15,155.71. The CAC 40 in Paris collapsed 2% to 6,787.68.
On Wall Street, futures on the benchmark S&P 500 and the Dow Jones Industrial Average fell 1.5%.
The S&P fell 1% on Friday as traders pulled money from the table after the Fed said 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 Jones lost 1.5% and the Nasdaq composite, dominated by technology stocks, slipped 0.1%.
In Asia, the Shanghai Composite Index slipped 1.1% to 3,593.60 after China’s central bank cut a key interest rate. The bank lowered its one-year prime rate to 0.05%, but left the five-year rate and its main policy rate unchanged.
The reduction is a “small step towards easing” monetary policy without changing efforts to reduce real estate debt, Macquarie’s Larry Hu and Xinyu Ji said in a report. Beijing’s use of multiple interest rates “is confusing, drastically reducing the signal” if only one is cut, they said.
The Nikkei 225 in Tokyo lost 2.1% to 27,937.81 and the Hang Seng in Hong Kong lost 1.9% to 22,744.86.
Seoul’s Kospi was down 1.8% to 2,963.00 and Sydney’s S & P-ASX 200 was down 0.2% to 7,292.20
India’s Sensex index opened down 2.3% to 55,811.05. New Zealand won as Southeast Asian markets retreated.
Traders had made an offer to airlines, cruise lines and other travel-related actions in hopes that the spread of omicron would not trigger more travel checks.
Sentiment has turned as the United States and other governments warn omicron is more prevalent than expected, leading to travel restrictions in some areas and the cancellation of public events.
The US government on Sunday warned of a possible wave of “revolutionary infections” as Americans travel for the Christmas and New Year holidays.
Stocks rallied briefly last week, then fell after Fed officials said on Wednesday they may accelerate cuts in bond purchases that inject money into financial markets. This sets the stage for the Fed to start raising interest rates next year.
Also potentially weighing on sentiment, a US senator said on Sunday that he would not support President Joe Biden’s $ 2 trillion infrastructure, social spending and climate plan. Joe Manchin’s announcement may doom the plan’s chances in the equally divided Senate.
Inflation has been a growing concern throughout 2021. Higher raw material costs and supply chain issues have increased overall costs for businesses, which have raised commodity prices to offset the impact. .
Consumers have so far absorbed these price increases, but they face continued pressure from price increases and this could lead to lower spending.
In energy markets, benchmark US crude plunged from $ 3.57 to $ 67.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell from $ 1.52 on Friday to $ 70.86. Brent crude, the basis of international oil prices, sank from $ 3.41 to $ 70.11 a barrel in London. It lost $ 1.50 the previous session to $ 73.52 a barrel.
The dollar fell to 113.41 yen from 113.70 yen on Friday. The euro gained $ 1.1261 against $ 1.1251.