Global stocks tumble on virus concerns
Tighter Fed policy further impacts; Shanghai, Tokyo, Seoul, Sydney, and Hong Kong in the red; Omicron concerns may tighten Christmas shopping; Higher raw materials costs and supply chain problems have been raising overall costs for businesses
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Beijing: Global stock markets and Wall Street futures tumbled Monday amid concern about the latest coronavirus variant and tighter Federal Reserve policy.
London and Frankfurt opened sharply lower. Shanghai, Tokyo and Hong Kong also fell at the start of a trading week that will be shortened by Christmas. Benchmark US oil fell by more than $3 per barrel. The spread of the Omicron variant has fuelled fears that renewed curbs on business and travel might worsen supply chain disruptions and boost inflation.
"Omicron threatens to be the Grinch to rob Christmas," Mizuho Bank's Vishnu Varathan said in a report. The market prefers safety to nasty surprises.
In early trading, the FTSE 100 in London fell 1.7 per cent to 7,143.60 and the DAX in Frankfurt lost 2.4 per cent to 15,155.71. The CAC 40 in Paris sank 2 per cent to 6,787.68. On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average lost 1.5 per cent.
On Friday, the S&P fell one per cent as traders took money off the table after the Fed indicated it would fight inflation by speeding up the withdrawal of economic stimulus. The index is two per cent below its all-time high and up 23 per cent for the year. The Dow lost 1.5 per cent and the Nasdaq composite, dominated by tech stocks, slipped 0.1 per cent. In Asia, the Shanghai Composite Index slid 1.1 per cent to 3,593.60 after China's central bank trimmed a key interest rate.
The bank cut its one-year Loan Prime Rate to 0.05 per cent but left the five-year rate and its main policy rate unchanged. The cut is a "small step toward easing" monetary policy without changing efforts to reduce debt in real estate, Larry Hu and Xinyu Ji of Macquarie said in a report. Beijing's use of multiple interest rates "is confusing, substantially muting the signal" if only one is cut, they said. The Nikkei 225 in Tokyo sank 2.1 per cent to 27,937.81 and the Hang Seng in Hong Kong lost 1.9 per cent to 22,744.86. The Kospi in Seoul declined 1.8 per cent to 2,963.00 and Sydney's S&P-ASX 200 retreated 0.2 per cent to 7,292.20. India's Sensex opened down 2.3 per cent at 55,811.05. New Zealand gained while Southeast Asian markets retreated. Traders had bid up airlines, cruise lines and other travel-related stocks on hopes omicron's spread wouldn't trigger more travel controls.
