(Bloomberg) — U.S. stock futures fell and bonds rallied as the economic threat of restrictions to control the new variant outweighed optimism about the efficacy of vaccines.
Contracts on both the S&P 500 and Nasdaq 100 retreated after the gauges ended higher Wednesday. Travel companies and airlines declined in pre-market trading, while drugmakers including Pfizer Inc. rose. CVS Health Corp. jumped after saying it would buy back shares and raise dividends. Treasuries rallied alongside government bonds across Europe.
The cost to contain the omicron strain is being tallied up amid mounting concern it will crimp the economic rebound. New work-from-home guidance in the U.K. could cost the country’s economy £2 billion ($2.6 billion) a month, according to Bloomberg Economics. A study found omicron is 4.2 times more transmissible than the delta variant in its early stages.
The global equity rally faces further potential road bumps ahead from U.S. consumer inflation numbers this week and a Federal Reserve meeting next week that may provide clues on the pace of tapering and interest rate increases.
The dollar stayed higher after a report showed applications for U.S. state unemployment benefits declined to the lowest level since 1969.
“We are looking to potentially have a rise in volatility even if the market continues higher around those events next week,” said Frances Stacy, Optimal Capital portfolio strategist, on Bloomberg Television.
In Europe, stocks reversed earlier gains to trade slightly lower. Among individual moves, Electricite de France SA fell with the government considering a cap on regulated power tariffs to help curb soaring electricity prices. Meanwhile, UniCredit SpA rose after saying it will return at least 16 billion euros ($18.1 billion) to shareholders by 2024.
In Asia, China Evergrande Group and Kaisa Group Holdings Ltd. officially defaulted on their dollar debt, while the People’s Bank of China raised its foreign currency reserve requirement ratio for a second time this year after the yuan climbed to the highest since 2018.
Bloomberg’s Markets Live team is running a survey on asset views for 2022. It’s anonymous, takes about 2 minutes, and the results will be shared in the latter part of December. To participate, click here.
Here are some key events to watch this week:
- Federal Reserve Bank of Minneapolis President Neel Kashkari speaks Thursday
- U.S. CPI Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.4% as of 8:35 a.m. New York time
- Futures on the Nasdaq 100 fell 0.5%
- Futures on the Dow Jones Industrial Average fell 0.5%
- The Stoxx Europe 600 fell 0.3%
- The MSCI World index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.1317
- The British pound was little changed at $1.3206
- The Japanese yen rose 0.3% to 113.38 per dollar
Bonds
- The yield on 10-year Treasuries declined four basis points to 1.48%
- Germany’s 10-year yield declined five basis points to -0.36%
- Britain’s 10-year yield declined seven basis points to 0.71%
Commodities
- West Texas Intermediate crude fell 1.1% to $71.60 a barrel
- Gold futures fell 0.4% to $1,778.80 an ounce
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
