Asian markets fall again but Europe, crude rebound from Covid rout

30-Nov-2021 Intellasia | AFP | 5:02 AM Print This Post

Asian markets fell again today after last week’s painful rout fuelled by news of the Omicron virus strain but European stocks and oil rebounded strongly as investors try to assess its threat to the global economic recovery.

Equities around the world went into freefall Friday on news of the heavily mutated variant, which some fear could evade vaccines, as it forced several governments to throw up flight bans from southern Africa where it was discovered and introduced fresh containment measures.

The crisis added to an already jittery mood on trading floors caused by surging inflation and central banks starting to roll back their ultra-loose monetary policies to prevent prices from running out of control.

“Omicron’s uncertainty has triggered a rethink on the global economic outlook,” said National Australia Bank’s Rodrigo Catril. “A new Covid wave may or may not be more infectious or deadly, but until we know more markets are likely to remain jittery.”

Some traders were taking solace in comments from two South African health experts who said symptoms of Omicron appeared to be mild so far, though the World Health Organization has urged caution.

But analysts warned markets would remain on edge until more was known about the variant.

“So perhaps we have a highly contagious, yet mild strain,” said Matt Simpson of StoneX Financial. “And if that is the case, markets could very well rally through December (as original fears recede) and markets refocus on Fed tightening and of course Santa’s rally.”

But Priya Misra, at TD Securities, added: “We really need some more answers to figure out the impact on growth.

“Risk assets are pricing in uncertainty.”

All three main indexes on Wall Street ended more than two per cent down, while London, Paris and Frankfurt were also pummelled at least 3.6 per cent lower.

But even those losses were dwarfed by crude, which fell off a cliff on its worst day since WTI went below $0 at the outset of the pandemic, with dealers fretting over the possible impact on demand if more lockdowns are introduced.

And Asian equities, which also suffered hefty selling pressure Friday, extended losses on Monday.

Tokyo led losses, shedding 1.6 per cent, after Japan said it will reinstate tough border measures, barring all new foreign arrivals, just weeks after a softening of strict entry rules. The news hit travel stocks, with airlines JAL and ANA shedding around four per cent each.

Hong Kong, Sydney, Seoul, Singapore, Taipei, Wellington and Manila also retreated. Shanghai also fell but the losses were limited, while Mumbai and Jakarta edged up.

However, London, Paris and Frankfurt started the week on the front foot, climbing more than one per cent each, while US futures also rose.

And crude also enjoyed a rally, with WTI briefly rising more than five per cent before easing back slightly, while Brent was four per cent higher having cratered 13.1 per cent and 11.5 per cent, respectively, on Friday.

The gains in oil came as reports said OPEC and other major producers were considering whether or not to continue their plan of raising output each month, in light of the latest rout and with the prospect of new shutdowns if Omicron becomes a major problem.

“The sell-off on Friday appeared a complete overreaction,” Daniel Hynes, at Australia & New Zealand Banking Group, said.

“While it’s still too early to estimate what this could mean for oil demand, we think the market will find some support as opportunistic buying emerges.”

In Hong Kong, casino operators plunged after police said the head of gambling enclave Macau’s largest junket operator had confessed to running illegal betting activities.

The arrest of Alvin Chau at the weekend marks the first of such a high-profile figure from the city’s gaming industry and comes as Beijing embarks on a crackdown, with plans announced in September to increase government regulation of the sector.

MGM China lost more than 10 per cent, while Galaxy Entertainment, Wynn Macau, Melco, SJM Holdings and Sands China also suffered steep losses.

Key figures around 0810 GMT

Tokyo Nikkei 225: DOWN 1.6 per cent at 28,283.92 (close)

Hong Kong Hang Seng Index: DOWN 1.0 per cent at 23,852.24 (close)

Shanghai Composite: FLAT at 3,562.70 (close)

London FTSE 100: UP 1.2 per cent at 7,128.06

West Texas Intermediate: UP 4.7 per cent at $71.36

Brent North Sea crude: UP 4.0 per cent at $75.62

Dollar/yen: DOWN at 113.20 yen from 113.38 yen at 2100 GMT on Friday

Pound/dollar: DOWN at $1.3336 from $1.3340

euro/dollar: DOWN at $1.1281 from $1.1311

euro/pound: DOWN at 84.59 pence from 84.77 pence

New York Dow: DOWN 2.5 per cent at 34,899.34 (close)


Category: FinanceAsia

Print This Post

Comments are closed.