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Indian Morning Briefing: Asian Markets Fall on Concerns Over Omicron Variant

GLOBAL MARKETS 
DJIA         34899.34  -905.04  -2.53% 
Nasdaq       15491.66  -353.57  -2.23% 
S&P 500       4594.62  -106.84  -2.27% 
FTSE 100      7044.03  -266.34  -3.64% 
Nikkei Stock 28745.68    -5.94  -0.02% 
Hang Seng    24019.00   -61.52  -0.26% 
Kospi         2927.02    -9.42  -0.32% 
SGX Nifty*   17168.00   124.5    0.73% 
*Dec contract 
 
USD/JPY 113.62-63  +0.22% 
Range   113.87   113.35 
EUR/USD 1.1278-81  -0.34% 
Range   1.1316   1.1277 
 
CBOT Wheat Dec $8.254 per bushel 
Spot Gold   $1,792.64/oz   0.1% 
Nymex Crude (NY) $68.17  -$10.22 
 
 
U.S. STOCKS 

On Monday morning in Asia, U.S. stock-index futures rose, suggesting U.S. markets could open higher later in the day. E-mini S&P futures were up 0.8%, while futures tied to the Dow were 0.6% higher.

On Friday, stocks, oil prices and government-bond yields slumped after South Africa raised the alarm over a fast-spreading strain of the coronavirus, triggering concern that travel restrictions and other curbs will spoil the global economy's recovery.

The Dow Jones Industrial Average fell 905.04 points, or 2.5%, to 34899.34. It was the Dow's biggest one-day percentage drop since October 2020.

The S&P 500 lost 106.84 points, or 2.3%, to 4594.62 and the Nasdaq Composite dropped 353.57 points, or 2.2%, to 15491.66. It was the worst Black Friday session on record for all three indexes. Markets closed early because of the holiday.

 
 
ASIAN STOCKS 

Japanese stocks are lower, dragged by falls in auto, energy and airline stocks, as concerns grow about the Omicron variant and new travel restrictions and other containment measures. Nissan Motor falls 4.3% and Tokyo Disney Resort-operator Oriental Land is 4.2% lower. Meanwhile, some game and tech stocks are higher: Nintendo gains 2.6% and Lasertec is 1.4% higher. Investors are paying attention to any developments over Covid-19 containment measures in Japan and elsewhere. The Nikkei Stock Average is 0.9% lower at 28484.99.

South Korea's Kospi Index fell 0.5% to 2923.36 as concerns of the spread of the highly infectious Omicron coronavirus variant weighed on sentiment. Travel-related stocks slumped, with Korean Air Lines down 6.1% and Samsung C&T Corp., which operates South Korea's Everland theme park, 2.3% lower. Index heavyweight Samsung Electronics fell 0.7%.

Hong Kong's Hang Seng Index was 0.1% higher at 24109.08 after opening lower, as gains in pharmaceutical stocks outweighed losses in bank stocks. Sentiment was being supported by a global effort among drug companies to assess the danger and potential impact of the coronavirus's new Omicron variant. Sino Biopharmaceutical gained 3.4% and Wuxi Biologics was 2.8% higher. However, concerns over the new variant were weighing on financial stocks. BOC Hong Kong and China Merchants Bank were each 0.2% lower, while Hang Seng Bank slipped 0.5%.

Chinese stocks were broadly lower in early trade, amid fears over that the emergence of a new Covid variant could spark a global wave of infections. The Shanghai Composite Index fell 0.8% to 3535.61, the Shenzhen Composite Index dropped 0.6% to 2493.13 while the ChiNext Price Index gained 0.8% to 3494.72. Auto stocks were among the worst performers, amid concerns over how the new variant may hurt demand. The emergence of the Omicron variant would dominate focus, particularly for CNY assets as China's border was largely closed to foreigners and its dynamic zero-Covid strategy was still in place, OCBC said.

FOREX 

USD/JPY recouped some of big losses marked on Friday due to concerns about the emerging Omicron variant of Covid-19 and new travel restrictions. The market's focus remains on any reports on whether existing Covid-19 vaccines are effective against the Omicron variant, IG said. USD/JPY may rise back toward 115 this week if reports suggest effectiveness, IG said. The pair was recently at 113.69 compared with 113.36 late Friday in New York.

AUD/USD could remain heavy and volatile this week and it would not take much negative news about the omicron variant to push the pair below 0.7000, Commonwealth Bank said. The pair was recently trading around 0.7140 but the AUD could fall as low as 0.6758 before year-end if the news about omicron is negative, the bank added. Australia's 3Q GDP data due Wednesday was unlikely to have a material impact on AUD because the data is dated. Economists expect a 2.6% on-quarter contraction in growth. CBA has penciled in a 3.5% contraction due to widespread lockdowns.

The Malaysian ringgit may continue to weaken this week to around 4.25 against the U.S. dollar, as renewed Covid-19 concerns trigger a global risk-off mood, Kenanga Research said. The ringgit breached 4.20 against the U.S. dollar last week for the first time in three months amid weakening oil prices and a stronger U.S. dollar. USD/MYR was recently 0.1% lower at 4.2385.

METALS 

Gold was slightly higher in early Asian trade, supported by safe-haven demand amid worries surrounding the global spread of the Omicron variant, ANZ said. Traders were also likely focusing on the timing of an expected interest rate increase by the Federal Reserve, which could be delayed due to the virus woes, it added. Spot gold was 0.1% higher at $1,792.64/oz.

OIL SUMMARY 

Oil gained in early Asian trade after dropping sharply in Friday's session as news of the highly contagious Omicron variant spooked markets. Goldman Sachs thinks the selloff looks overdone, given that mobility restrictions would likely only lower global oil demand by 0.5 million barrels a day, excluding jet fuel. The investment bank would continue to focus on further developments on the spread of the Omicron variant before changing its supply and demand forecasts. Front-month WTI crude rose 5.4% to $71.80/bbl; front-month Brent crude added 4.7% to $76.11/bbl.

 
 
TOP HEADLINES 
 
Omicron Variant Is Reported in More Countries as Officials Grapple With How to Respond 
Covid-19 Vaccine Makers Assess Omicron Response 
Asian Markets Fall in Early Monday Trading on Covid-19 Concerns 
RBNZ Chief Economist Doesn't See Omicron Derailing Rate Increases 
Omicron Variant Found on Flights Reveals Gaps in Covid-19 Travel Rules 
Omicron Variant Not Detected Yet, but Likely Already in U.S., Health Officials Say 
Clearlake Capital to Buy Quest Software From Francisco Partners 
Nissan to Spend $17.6 Billion on Battery-Powered Vehicles Over Five Years 
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Australia Seeks to Make Social-Media Firms Liable for Users' Defamatory Comments 
Macau Police Question Junket Boss Over Alleged Illegal Gambling Syndicate 
Hertz-Tesla Deal Signals Broad Shift to EVs for Rental-Car Companies 
Peloton Sues Lululemon in Escalating Fight Over Bike Company's Clothing Line 
Organized Retail Thefts Continue Over Thanksgiving Weekend 
Labor Talks to Start in 2022 at Congested West Coast Ports 
Iran's Nuclear Advances Weigh on Renewed Talks 
 
 

(END) Dow Jones Newswires

November 28, 2021 22:15 ET (03:15 GMT)

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