Shares and oil prices are falling as Omicron waves are generated by Reuters


© Reuters. File: February 26, 2021 A person crosses the stock quote board at a brokerage firm in Tokyo, Japan. REUTERS / Kim Kyung-Hoon

By Wayne Cole

SYDNEY (Reuters) — Asian stock markets plummeted and oil prices plummeted on Monday as the Omigron Covid-19 lawsuits triggered tight sanctions in Europe and threatened to swamp the world economy in the New Year.

Beijing eased the mood a bit by lowering one-year lending rates by 20 months, although some hoped the five-year rates would ease.

Chinese blue chips fell another 0.4%, while the MSCI index of Asia-Pacific stocks outside Japan fell 0.8%. Shares of South Korea fell 1.7% and 1.2%.

0.8% and Nasdaq Futures nearly 1% shit. EUROSTOXX 50 futures lost 1.1% and futures 1.0%.

The spread of Omigran saw the Netherlands lock down on Sunday and pressure others to follow, although the United States appeared to remain open.

«Omigron has been set up as the crimson who stole Europe’s Christmas,» said Tapas Strickland, the NAB’s director of economics. «As Omigron cases double every 1.5-3 days, it is likely that hospital systems will be overcrowded even with effective vaccines.»

While corona virus controls obscure the outlook for economic growth, they also raise the risk of raising inflation and making central banks worse.

It is noteworthy that Federal Reserve officials have been openly talking about raising rates since March and starting to cut the central bank’s balance sheet by mid-2022.

This is far more severe than indicated by the futures, which so far exceeded Fed intentions. With prices set at only a 40% chance of a market rise in March, June is still a favorable month to raise.

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Such hawk chats by the central bank are one of the main reasons why long-term treasury yields fell last week due to short-term gains. It has gone from a two-10 year curve to its flat level since late 2020, reflecting the risk of a tight policy leading to a recession.

BofA economists consider this risk to be unbearable in equity, although a recent study by fund managers expected a 6% recession next year and only 13% of stocks were underweight. While most people are overweight in technology, “long technology” is still seen as a more crowded business.

They also noted that by 2021, the winners were oil with 48%, REITs with 42%, Nasdaq with 25% and banks with 21%. Among the losers, biotech lost 22%, China 22%, silver 19% and JGBs 10%.

1996 has been the best year for commodities and 1949 has been the worst year for global government securities.

At the start of Monday, the yield on the US 10 year notes was 1.38%, down from 1.776% in 2021.

The central bank’s hawk twist, coupled with a safe haven jump, followed the rise of 0.7% on Friday, underlining its year high of 96.674.

The euro fell 0.8% to $ 1.1184 on Friday, weakening to $ 1.1237. The Japanese Yen has its own safe haven level and stands at 113.49 against the dollar.

Sterling fell to $ 1.3224 as Omicron worries wiped out all gains following the Bank of England’s surprise rate hike last week.

Gold traded at $ 1,801 an ounce last week as stock markets plunged.

Oil prices fell amid concerns that the spread of the Omicron variant could reduce demand for fuel and signs of improving supply. [O/R]

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It was down $ 1.66 per barrel to $ 71.86 and $ 1.44 to $ 69.42 per barrel.

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