Asian markets, oil rise after sell-off but virus casts shadow

Asian markets, oil rise after sell-off but virus casts shadow


HONG KONG: Equities stabilised and oil prices saw a much-needed gain Tuesday after their latest flop as bargain-buyers moved in, though investors remain fixated on the fast spreading Omicron variant and moves to contain it over the festive period.

It is reported that the moderate Democratic Senator Joe Manchin may still be willing to discuss Joe Biden’s $1.75 trillion social spending bill — which was a blow to the White House on Sunday’s rejection of the bill — and provided a bit of support, even though negotiations may lead to procrastination.

Since the emergence of Omicron, the market has been under shock because it spread rapidly among the population and forced the government to take measures to protect their population, but these measures have caused damage to the economy.

The Netherlands imposed a blockade during the holidays, and Germany tightened restrictions, which particularly affected non-vaccinations and media speculation that the United Kingdom might adopt stricter restrictions.

“There is more uncertainty than I think most people thought we would see here as they were anticipating a Santa Claus rally,” said Victoria Fernandez of Crossmark Global Investments on Bloomberg Television.

“Volatility and uncertainty are the key terms that will lead us into the new year.”

And National Australia Bank’s Ray Attrill added: “For now… it’s the short term economic impact of the virus spread and related restrictions that is front and centre of market focus.”

All three main indexes on Wall Street ended down more than one percent, though they pared early losses.

And Asia started Tuesday on the front foot. Tokyo added two percent, while there were also healthy gains in Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei and Jakarta.

Crude joined equities, with both main contracts seeing gains of at least one percent, having been hammered in recent days by concerns that new Omicron measures will erase demand, with travel curbs already in place in several countries and many people choosing to stay home.

The latest wave of Covid infections comes at a time when central banks around the world are beginning to cancel the ultra-loose monetary policy implemented at the beginning of the pandemic to protect the economy from the damage of the blockade.

The Bank of England announced an unexpected interest rate hike this month, joining some other ranks, and the Fed finally abandoned its insistence that inflation will be temporary, and announced that it will accelerate the reduction of its huge bond purchase program.

The Fed is expected to raise borrowing costs three times before the end of 2022, thus closing the curtain on the era of cheap cash that has helped drive the global market rebound since the early days of the Covid crisis.

“The normalization of monetary policy will continue to bring about volatility and will maintain the bull-bear debate between growth and value,” said Martin Currie investment manager Zehrid Osmani.

“The Omicron variant may disrupt both economic momentum and monetary policies, should it lead to renewed significant lockdown measures.”

The Turkish lira dropped against the dollar, having surged Monday in response to measures announced by the government to bolster the beleaguered currency.

The unit had been suffering another heavy selling session after President Recep Tayyip Erdogan affirmed at the weekend that his Islamic faith prevented him from supporting rate hikes to bring inflation under control, instead opting to reduce costs.

However, observers said he bowed to market pressure and raised rates by stealth when he announced a complex series of measures Monday.

The currency saw its biggest jump since 1983, according to Bloomberg News, before paring the gains.

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