Friday, January 28, 2022

Asian Shares Fall as Investors Weigh Economic Risks omicron | AP News

TOKYO (AP) – Asian stocks were mostly down on Tuesday as investors cautiously weighed in on the damage the new omicron coronavirus could wreak on the global economy.

South Korean Kospi became the leader in regional losses, falling 2.4% to 2,839.01.

Japanese benchmark Nikkei 225 lost its previous gain and fell 1.6% to 27,821.76 amid pessimism over the omicron option. Australia’s S & P / ASX 200 added 0.2% to 7,256.00. The Hong Kong Hang Seng fell 1.7% to 23,439.91, while the Shanghai Composite was almost flat at 3,563.89.

The 10-year Treasury yield fell to 1.46% from 1.51% on Monday night. It tends to rise and fall based on expectations for the strength of the US economy and inflation.

Some analysts believe that a severe economic downturn like last year is likely to be averted as many people have been vaccinated. But they also believe that a return to pre-pandemic levels of economic activity, especially in tourism, has been sharply delayed.

“Sentiment may hinge on a positive handover from Wall Street overnight, but with a slower pace of vaccinations and more limited health care in the region, the uncertainty surrounding a new omicron option could presumably lead to higher economic risks for the region as it moves on to further discovery, ”said Yeap Jun Rong, IG’s market strategist in Singapore, about omicron’s impact on Asia.

Vaccination rates vary by country in the region: around 77% in Japan, 50% in Vietnam, and 35% in Indonesia. In Asia, a variant of the omicron has been discovered in Australia, Japan and Hong Kong, and the region is gearing up for more cases. It is unclear how effective existing vaccines against the new variant might be.

On Wall Street, the S&P 500 rose 1.3% to 4,655.27, recovering more than half of its decline on Friday, the worst since February. Bond yields and crude oil have also recovered chunks of what they had lost in the harsh reaction of traders to flee to safety and out of risky investments.

The Nasdaq added 1.9% to 15,782.83. The Russell 2000 Small Business Index fell 0.2% to 2,241.98.

The Dow Jones Industrial Average fluctuated between profit and loss, climbing 0.7% to 35,135.94.

The VIX, which measures how worried investors are about the upcoming fall in the S&P 500, has dropped significantly. But this is not all that was before the omicron.

But while the market has stabilized, omicron increases the risk to the global economy, which is already grappling with paralyzing uncertainty. This option appears to be spreading more easily, with countries around the world erecting travel obstacles in hopes of stopping it.

Travel bans, including decisions by Japan and Israel to ban foreign visitors, threaten to undermine global business. Already constrained by bottlenecks, global supply chains could be further constrained if outbreaks shut down factories, ports and warehouses.

Transportation problems could drive up prices, exacerbating inflationary pressures. In response, the world’s central banks could raise interest rates and jeopardize recovery from a short but intense coronavirus-related recession last year.

Aside from waiting for new clues about what economic damage the omicron will ultimately do, the market has several milestones this week that could affect prices. The headliner is likely to be Friday’s employment report, in which economists expect an increase in the number of employers’ employees in November.

The US economic recovery lost much momentum when it hit the highly contagious Delta variant in the summer. Economic growth slowed to 2.1% pa from July to September from 6.7% from April to June.

However, more Americans are now being vaccinated and the economy has shown resilience, recovering from the summer recession.

Of course, the only way to know which scenario will eventually happen is to wait to see it through. And this uncertainty, meanwhile, could lead to new up and down fluctuations in the stock market, which is up more than 24% this year and set a record as recently as November 18.

In energy trading, US benchmark crude fell 3%, or $ 2.10, to $ 67.85 a barrel. On Monday, it rose $ 1.80 to $ 69.95 a barrel. Brent crude, the international standard, fell $ 2.52 to $ 70.70 a barrel.

In foreign exchange trading, the US dollar fell to 113.09 Japanese yen from 113.56 yen. The euro rose to $ 1.1326 from $ 1.1291.

Nation World News Desk
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