Stocks Drop With Oil on Manchin Shock, Omicron: Markets Wrap


(Bloomberg) — U.S. equity futures, Asian stocks and crude oil fell Monday amid concerns about more curbs to tackle the omicron virus variant, tightening monetary policy and a setback for President Joe Biden’s economic agenda.

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Equities dropped in Japan, Australia and South Korea. Bond yields slid and gold edged higher as investors sought havens. The dollar was steady.

Traders were assessing the latest comments from U.S. Senator Joe Manchin, who left Democrats with few options for reviving Biden’s economic agenda after rejecting the roughly $2 trillion tax-and-spending package.

Global stocks retreated last week in part on an outlook of diminishing central bank stimulus as officials pivot toward fighting inflation. Federal Reserve Governor Christopher Waller said a faster wind-down of the central bank’s bond-buying program puts it in a position to start lifting interest rates as early as March.

Markets are grappling with a range of uncertainties while heading toward a holiday period when thinner trading volumes can exacerbate swings.

“Omicron remains a concern and cases are on the rise,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management. “Investors should be prepared for Covid to continue to be a main factor in market performance heading into 2022. After the bull run we’ve seen over the past 21 months, investors aren’t as used to prolonged periods of volatility.”

In China, the focus is on the loan prime rate decision. The Chinese central bank’s benchmark hasn’t been cut since April 2020 but calls for easing are growing amid a property sector crackdown that’s weighing on economic expansion.

Meanwhile, President Recep Tayyip Erdogan pledged to continue interest rate cuts that have made the Turkish lira the world’s worst performing currency over the past three months.

Elsewhere, Bitcoin held a decline in a sign of the reduced ardor for speculative investments as 2021 comes to a close.

On the virus front, rising cases led the Netherlands to return to lockdown, while U.K. Health Secretary Sajid Javid refused to rule out stronger measures before Christmas. U.S. lockdowns likely won’t be necessary but hospitals may be strained, Biden’s top medical adviser Anthony Fauci said.

For more market analysis, read our MLIV blog.

What to watch this week:

  • China loan prime rates Monday

  • Reserve Bank of Australia releases minutes of its December interest rate meeting. Tuesday

  • EIA crude oil inventory report Wednesday

  • Bank of Japan Governor Haruhiko Kuroda speaks Thursday

  • U.S. consumer income , new home sales, U.S. durable goods, University of Michigan consumer sentiment, initial jobless claims. Thursday

  • Friday: U.S. markets are closed. European markets close earlier

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.7% as of 9:13 a.m. in Tokyo. The S&P 500 fell 1% Friday

  • Nasdaq 100 futures fell 0.6%. The Nasdaq 100 fell 0.4% Friday

  • Topix index lost 1%

  • Australia’s S&P/ASX 200 Index slid 0.5%

  • Kospi index declined 1.1%

Currencies

  • The Japanese yen was little changed at 113.56 per dollar

  • The offshore yuan was at 6.3882 per dollar

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was at $1.1246

Bonds

Commodities

  • West Texas Intermediate crude fell 2% to $69.43 a barrel

  • Gold was at $1,800.82 an ounce

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