(Bloomberg) — A global stock selloff abated Tuesday amid a rise in U.S. equity futures and Asian shares as investors evaluated the impact of curbs against the omicron virus variant and the outlook for President Joe Biden’s stymied economic agenda.
Shares climbed in Japan and South Korea and fluctuated in Australia. S&P 500 and Nasdaq 100 contracts were in the green, signaling some stabilization after the broader U.S. equity gauge posted its biggest three-day drop since September. Lower volumes ahead of the Christmas holiday period threaten to exacerbate market moves.
Longer-maturity Treasuries maintained a drop. The dollar was little changed and 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
“There is more uncertainty than I think most people thought we would see here as they were anticipating a Santa Claus rally,” Victoria Fernandez, Crossmark Global Investments chief market strategist, said on Bloomberg Television. “Volatility and uncertainty are the key terms that will lead us into the new year.”
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 0.4% as of 9:07 a.m. in Tokyo. The S&P 500 fell 1.1%
- Nasdaq 100 futures rose 0.6%. The Nasdaq 100 fell 1.1%
- Japan’s Topix index climbed 1.2%
- Australia’s S&P/ASX 200 Index added 0.1%
- South Korea’s Kospi index rose 0.3%
- Hang Seng Index futures were flat earlier
Currencies
- The Japanese yen was little changed at 113.66 per dollar
- The offshore yuan traded at 6.3830 per dollar
- The Bloomberg Dollar Spot Index was flat
- The euro was at $1.1274
Bonds
- The yield on 10-year Treasuries was stable at 1.42%
- Australia’s 10-year bond yield increased about four basis points to 1.58%
Commodities
- West Texas Intermediate crude rose 0.8% to $69.14 a barrel
- Gold was at $1,791.39 an ounce
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