Equities and Oil prices fall as Omicron hits nations

oil prices fall

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On Monday, Oil prices and Asian share markets decline over Omicron waves. Analysts suggest Omicron can threaten the global economy in the new year.

Chinese blue chips were still down 0.4 percent, while the MSCI Asia-Pacific ex-Japan index was down 0.8 percent. The Nikkei in Japan fell 1.7 percent, while South Korean markets plunged 1.2 percent.

This is considerably more dramatic than predicted by futures, which had previously been well ahead of Fed objectives. Only a 40% possibility of a rise in March has been priced into the market, with June being the most likely month for a hike.

Futures on the EURO STOXX 50 fell 1.1 percent, while FTSE futures down 1.0 percent. Futures of S&P 500 and Nasdaq also get affected as they fell 0.8% and nearly1%, respectively. 

While limits on coronaviruses obstruct economic progress, they also risk keeping inflation high and prompting central banks to become furthermore hawkish.

Officials from the Federal Reserve were publicly discussing raising rates as early as March and beginning to shrink the central bank’s balance sheet in mid-2022.

Long-term Treasury yields declined last week as short-term yields climbed, owing to the Fed’s hawkish comments. The two-to-ten-year curve is now reaching its flattest level since late 2020, highlighting the risk of a recession if the policy is tightened further.

Gold was higher at $1,801 an ounce, having ended a five-week losing record as equities fell last week. Omicron’s fears wiped off all the gains achieved following the Bank of England’s unexpected rate hike last week, sending sterling down to $1.3224.

The spread of Omicron caused the Netherlands to go into lockdown on Sunday, putting pressure on countries to do the same, even though the US appeared to be unaffected.

The euro was trading at $1.1237, down 0.8 percent from Friday’s low of $1.1184, which can be this year’s low. The Japanese yen, which has its safe-haven status, has remained stable at 113.49 per dollar. Brent crude declined $1.66 to $71.86 per barrel, while US crude fell almost $1.5 to $69.40.

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