(Bloomberg) — The global stock slide may ease Tuesday when markets open in Asia as investors digest the impact of curbs against the omicron virus variant and the outlook for President Joe Biden’s stymied economic agenda.
Australian shares fluctuated, and futures for Japan and Hong Kong signaled a steady start. U.S. contracts climbed modestly after the S&P 500 posted its biggest three-day drop since September. Lower volumes ahead of the Christmas holiday period threaten to exacerbate market moves.
Longer-maturity Treasuries slipped, the yield curve steepened and a gauge of the dollar edged lower in U.S. hours. Risk-sensitive currencies, such as those of commodity producers, held losses. Crude oil pared a tumble.
Investors are trying to evaluate how long and deep a hit the global economic reopening faces from the omicron flareup as a variety of nations step up mobility curbs. Such restrictions could add to pandemic-era supply chain and labor snarls that have stoked inflation and prompted central banks to tighten monetary settings.
“Monetary policy normalization will continue to bring volatility and will maintain the bull-bear debate between growth and value,” said Zehrid Osmani, Martin Currie’s head of global long-term unconstrained equities. “The omicron variant may disrupt both economic momentum and monetary policies, should it lead to renewed significant lockdown measures.”
Biden, meanwhile, hasn’t given up on his roughly $2 trillion Build Back Better economic plan after Senator Joe Manchin rejected it. Manchin on Monday outlined possible changes that might draw his support, saying he could back a revised $1.75 trillion bill.
China Slide
Elsewhere, Chinese stocks listed in the U.S. slid to the lowest level since August 2019. A slowdown in China’s debt-laden property sector is dragging on the nation’s economy. Beijing’s regulatory crackdown on private industries has also soured sentiment.
Turkey’s lira held its biggest gain in decades. The currency rebounded from a record low after President Recep Tayyip Erdogan’s government announced extraordinary measures to bolster the currency.
In the latest virus developments, Moderna Inc. said a third dose of its Covid-19 vaccine increased antibody levels against omicron.
The variant accounted for 73% of all Covid-19 infections last week in the U.S. London hospitalizations were 34% higher than a week ago. Daily infections in South Africa, where the variant was first identified, were down 44% to the lowest in two weeks.
What to watch this week:
- 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
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 future rose 0.3% as of 8:19 a.m. in Tokyo. The S&P 500 fell 1.1%
- Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 1.1%
- Nikkei 225 futures rose 1.2%
- Australia’s S&P/ASX 200 Index added 0.2%
- Hang Seng Index futures were flat earlier
Currencies
- The Japanese yen was little changed at 113.63 per dollar
- The offshore yuan traded at 6.3818 per dollar
- The Bloomberg Dollar Spot Index fell 0.1% Monday
- The euro was at $1.1279
Bonds
- The yield on 10-year Treasuries rose two basis points 1.42%
- Australia’s 10-year bond yield increased three basis points to 1.57%
Commodities
- West Texas Intermediate crude rose 0.8% to $69.14 a barrel
- Gold was at $1,791.13 an ounce
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