World Shares, US Futures Slip on Worries Over Omicron Risks
NEW YORK (AP) — Global shares mostly slipped Tuesday as investors cautiously weighed how much damage the new omicron coronavirus variant may unleash on the global economy.
Germany’s DAX lost 1.1% to 15,106.35 in afternoon trading. France’s CAC 40 slipped 0.9%, while Britain’s FTSE 100 shed 0.8%. In Asia, Japan’s benchmark Nikkei 225 closed 1.6% lower at 27,821.76, as pessimism over the omicron variant set in. Hong Kong’s Hang Seng also fell 1.6%, while the Shanghai Composite was nearly flat.
U.S. shares were set for a lower open, with the future contract for the Dow industrials down 1% at 34,710.00. S&P 500 futures fell 0.8% after the benchmark index rose 1.3% Monday.
Omicron adds more risk to a global economy already contending with paralyzing uncertainty. The variant appears to spread more easily, and countries around the world have put up barriers to travel in hopes of stemming it.
Travel bans, including decisions by Japan and Israel to bar foreign visitors, threaten to disrupt global business. Global supply chains already gummed up by bottlenecks could be further ensnarled if outbreaks shut down factories, ports and freight yards.
Federal Reserve Chair Jerome Powell says that the appearance of the new variant could slow the U.S. economy and hiring, while also raising uncertainty about inflation.
The recent increase in delta cases and the emergence of the omicron variant “pose downside risks to employment and economic activity and increased uncertainty for inflation,” Powell said Monday in prepared remarks to be delivered to the Senate Banking Committee on Tuesday. The new variant could also worsen supply chain disruptions, he said.
Some analysts think a serious economic downturn, like what happened last year, likely will be averted because many people have been vaccinated. But they also think a return to pre-pandemic levels of economic activity, especially in tourism, has been dramatically delayed.
“Uncertainty from the new omicron variant may seem to bring about higher economic risks for (Asia) at a time where it is shifting towards further reopening,” Yeap Jun Rong, market strategist at IG in Singapore, said of the omicron’s impact on Asia.
China’s manufacturing activity rebounded in November as orders improved and power shortages eased, according to a survey by an industry group and the national statistics agency.
The survey found that a monthly purchasing managers’ index rose to 50.1 from October’s 49.2 on a 100-point scale. The index spent the previous two months below 50, showing decreasing activity. A measure of production rose 3.6 points to 52, reflecting a recovery from power rationing imposed in major manufacturing areas in September.
Besides waiting on more clues about how much economic damage omicron will ultimately do, the market has several big mileposts this week that could swing prices. The headliner is likely Friday’s U.S. jobs report, where economists expect to see an acceleration in hiring by employers during November.
In energy trading, benchmark U.S. crude dropped $2.03 to $67.92 a barrel. It rose $1.80 to $69.95 per barrel on Monday. Brent crude, the international standard, fell $2.29 to $70.93 a barrel.
In currency trading, the U.S. dollar slipped to 112.87 Japanese yen from 113.56 yen. The euro advanced to $1.1365 from $1.1293.
In The News
GENEVA, Switzerland – Policy makers the world over will face a complex and often divergent set of economic challenges this... Read More
GENEVA, Switzerland – Policy makers the world over will face a complex and often divergent set of economic challenges this year as COVID wanes and other challenges, ranging from inflation to record fiscal debt levels, retake center stage, said participants at the Davos Agenda, a virtual... Read More
WASHINGTON (AP) — President Joe Biden will nominate three people for the Federal Reserve's Board of Governors, including Sarah Bloom... Read More
WASHINGTON (AP) — President Joe Biden will nominate three people for the Federal Reserve's Board of Governors, including Sarah Bloom Raskin, a former Fed and Treasury official, for the top regulatory slot and Lisa Cook, who would be the first Black woman to serve on the... Read More
CHARLESTON, W.Va. (AP) — For the first time in half a year, families on Friday are going without a monthly... Read More
CHARLESTON, W.Va. (AP) — For the first time in half a year, families on Friday are going without a monthly deposit from the child tax credit — a program that was intended to be part of President Joe Biden's legacy but has emerged instead as a flash point over who... Read More
WASHINGTON (AP) — The number of Americans applying for unemployment benefits rose last week to the highest level since mid-November,... Read More
WASHINGTON (AP) — The number of Americans applying for unemployment benefits rose last week to the highest level since mid-November, but still low by historic standards. U.S. jobless claims climbed by 23,000 last week to 230,000. The four-week moving average, which smooths out week-to-week blips, was... Read More
WASHINGTON (AP) — Inflation jumped in December at its fastest year-over-year pace in nearly four decades, surging 7% and raising... Read More
WASHINGTON (AP) — Inflation jumped in December at its fastest year-over-year pace in nearly four decades, surging 7% and raising costs for consumers, offsetting recent wage gains and heightening pressure on President Joe Biden and the Federal Reserve to address what is increasingly Americans’ central economic... Read More
LONDON (AP) — Cybersecurity and space are emerging risks to the global economy, adding to existing challenges posed by climate change and... Read More
LONDON (AP) — Cybersecurity and space are emerging risks to the global economy, adding to existing challenges posed by climate change and the coronavirus pandemic, the World Economic Forum said in a report Tuesday. The Global Risks Report is usually released ahead of the annual elite winter gathering of CEOs and... Read More