(Bloomberg) — U.S. equity futures, most Asian stocks and crude oil fell Monday amid concerns about more curbs to tackle the omicron virus variant and a setback for President Joe Biden’s economic agenda.
MSCI Inc.’s gauge of Asia-Pacific equities was on track to drop for its sixth session in seven. Bond yields dipped, gold edged higher and the dollar held a jump from Friday amid a mood of caution.
Traders were assessing the latest comments from U.S. Senator Joe Manchin, who left Democrats with few options for reviving Biden’s agenda after rejecting the roughly $2 trillion tax-and-spending package.
Fresh lockdowns in parts of Europe to stem the rapid spread of omicron are also unsettling investors and weighing on risk sentiment.
In China, the central bank lowered the one-year loan prime rate for the first time in 20 months while keeping the five-year rate steady. Chinese shares fluctuated. Calls for easing had grown amid a property sector crackdown that’s weighing on economic expansion.
Markets are grappling with a range of uncertainties while heading toward a holiday period when thinner trading volumes can exacerbate swings. The latest curve-ball came from Manchin, with Goldman Sachs Group Inc. economists led by Jan Hatzius reducing their U.S. economic growth forecasts in the wake of the senator’s move.
“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.”
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.
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 0.6% as of 10:49 a.m. in Tokyo. The S&P 500 fell 1% Friday
- Nasdaq 100 futures fell 0.6%. The Nasdaq 100 fell 0.4% Friday
- Japan’s Topix index lost 1%
- Australia’s S&P/ASX 200 Index slid 0.3%
- South Korea’s Kospi index declined 1.1%
- Hong Kong’s Hang Seng Index fell 0.4%
- China’s Shanghai Composite Index declined 0.1%
Currencies
- The Japanese yen was little changed at 113.56 per dollar
- The offshore yuan was at 6.3865 per dollar
- The Bloomberg Dollar Spot Index was little changed
- The euro was at $1.1240
Bonds
- The yield on 10-year Treasuries fell about about two basis points to 1.38%
- Australia’s 10-year bond yield declined three basis points to 1.56%
Commodities
- West Texas Intermediate crude fell 2% to $69.43 a barrel
- Gold was at $1,800.82 an ounce
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