(Bloomberg) — Stocks looked set for a mixed start 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.
Futures earlier slipped for Japan and Australia but rose for Hong Kong. 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 raising interest rates as early as March. The dollar was steady in early trading after jumping Friday.
The Treasury yield curve flattened as traders contemplated a quick but shallow hiking cycle that, along with the virus fallout, could sap the economy.
Rising Covid-19 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.
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 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.
“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.
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
- The S&P 500 fell 1% Friday
- The Nasdaq 100 fell 0.4% Friday
- Nikkei 225 futures fell 0.2% earlier
- Australia’s S&P/ASX 200 Index futures fell 0.4% earlier
- Hang Seng Index futures rose 0.4% earlier
Currencies
- The Japanese yen was little changed at 113.64 per dollar
- The offshore yuan was at 6.3872 per dollar
- The Bloomberg Dollar Spot Index rose 0.6% Friday
- The euro was at $1.1241
Bonds
- The yield on 10-year Treasuries fell about one basis point to 1.40% Friday
Commodities
- West Texas Intermediate crude fell 2.1% to $70.86 a barrel
- Gold was at $1,798.11 an ounce
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