Asian shares mixed after omicron worries rattle Wall Street

Nov 30, 2021, 12:49 AM | Updated: 10:17 pm
A currency trader watches computer monitors near the screens at a foreign exchange dealing room in ...

A currency trader watches computer monitors near the screens at a foreign exchange dealing room in Seoul, South Korea, Wednesday, Dec. 1, 2021. Asian shares were mixed Wednesday amid nervous trading due to worries over the newest coronavirus variant. (AP Photo/Lee Jin-man)

(AP Photo/Lee Jin-man)

TOKYO (AP) — Asian shares were mixed Wednesday amid nervous trading due to worries over the newest coronavirus variant.

Japan’s benchmark Nikkei 225 was up 0.8% in morning trading to 28,062.99, after gyrating earlier in the session. South Korea’s Kospi jumped 1.1% to 2,869.67. Australia’s S&P/ASX 200 dipped 0.4% to 7,229.40. Hong Kong’s Hang Seng gained 1.3% to 23,787.71, while the Shanghai Composite was little changed, inching down less than 0.1% to 3,563.03.

The detection of the omicron variant in Japan, as well as Brazil, announced Tuesday, has raised fears that further measures to contain infections would squelch tourism and other economic activity. Experts say it may take weeks before they know more details about whether the omicron variant causes serious illness.

Anderson Alves, a trader at ActivTrades, said Asian markets were nervous after an overnight slide on Wall Street and comments from Moderna’s CEO that existing COVID-19 vaccines may be less effective with omicron than earlier variants.

“Traders will look for new insights regarding the new variant and its impact on the current vaccine framework,” Alves said.

Wall Street’s losses deepened after the head of the Federal Reserve said it will consider shutting off its support for financial markets sooner than expected.

The S&P 500 fell 1.9%, erasing its gains from a day earlier. The sell-off accelerated after Fed Chair Jerome Powell told Congress the central bank may halt the billions of dollars of bond purchases it’s making every month “perhaps a few months sooner.” It had been on pace to wrap up the purchases, meant to goose the economy by lowering rates for mortgages and other long-term loans, in June.

An end to the purchases would open the door for the Fed to raise short-term interest rates from their record low of nearly zero. That in turn would dilute a major propellant that has sent stocks to record heights and swatted away concerns about an overly pricey market. As investors moved up their expectations for the Fed’s first rate hike following Powell’s remarks, yields on short-term Treasuries rose.

Losses for stocks mounted quickly, with the drop for the Dow Jones Industrial Average more than tripling in half an hour as it sank 711 points. The blue chip index ended down 652.22 points, or 1.9%, at 34,483.72.

The Nasdaq composite held up slightly better than the rest of the market, shedding 245.14 points, or 1.6%, to 15,537.69. Higher interest rates tend to hurt stock prices broadly, but they hit hardest those seen as the most expensive or banking on big profit growth the furthest in the future. Such companies play a bigger role in the Nasdaq than other indexes. Microsoft fell 1.8% and chipmaker Nvidia slid 2.1%.

The whammy on interest rates came after stocks were already weak in the morning due to concerns about how badly the fast-spreading omicron variant of the coronavirus may hit the global economy.

Much is left to be determined about the variant, including how much it may slow already gummed-up supply chains or scare people away from stores. That uncertainty has sent Wall Street through up-and-down jolts as investors struggle to handicap how much economic damage omicron will ultimately do.

“There will be heightened volatility around any piece of information,” said Kristina Hooper, chief global market strategist at Invesco. She said markets will likely remain cautious “before we know more.”

The S&P 500 dropped 88.27 points to 4,567. The benchmark index sank 2.3% Friday for its worst loss since February, only to rise 1.3% Monday as investors reconsidered whether the reaction was overdone, before giving way to Tuesday’s loss. The index closed out November with a 0.8% loss. That follows a 6.9% gain in October and a 4.8% drop in September. The index is now up 21.6% for the year.

One measure of nervousness in the stock market jumped almost 19% Tuesday, nearing its level from Friday, when it touched its highest point since March. Much of the rise occurred after Powell began speaking.

Gold usually does well when fear among investors is rising, but its price slipped 0.5%. Higher interest rates could reduce the appeal of gold, which doesn’t pay its holders any interest.

If omicron does ultimately do heavy damage to the global economy, it could put the Federal Reserve in a difficult spot. Usually, the central bank will lower interest rates, which encourages borrowers to spend more and investors to pay higher prices for stocks.

But low rates can also encourage inflation, which is already high across the global economy. Powell acknowledged in his testimony before Congress that inflation has been worse and lasted longer than the Fed expected. For months, officials described inflation as only “transitory,” but Powell said that word no longer works.

The subsequent losses for stocks Tuesday were widespread, with all but seven stocks in the S&P 500 ending lower. Apple rose 3.2% for the biggest gain in the index.

Smaller stocks also took heavy losses. The Russell 2000 index slid 43.07 points, or 1.9%, to 2,198.91. Investors typically see them getting hurt more than their larger rivals by both higher interest rates and by a weaker U.S. economy.

One signal in the bond market was also flashing some concern about the economy’s prospects. Longer-term Treasuries usually offer higher yields than shorter-term Treasuries, in part to make up for the increased risk that future inflation may eat into their returns.

A 10-year Treasury is still offering more in yield than a two-year Treasury, but the gap narrowed sharply on Tuesday. The two-year yield rose to 0.54% from 0.51% late Monday. The 10-year yield, meanwhile, fell to 1.45% from 1.52%.

In energy trading, benchmark U.S. crude added $1.42 to $67.60 a barrel. Brent crude, the international standard, fell $2.87 to $70.57 a barrel.

In currency trading, the U.S. dollar gained to 113.44 Japanese yen from 113.18 yen. The euro cost $1.1322, down from $1.1339.

___

AP Business Writers Damian J. Troise, Stan Choe and Alex Veiga contributed.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE— David Mugar, founder and executive director of the Boston Pops Fireworks Spectacular, smile...
Associated Press

David Mugar, force behind Boston July 4th celebration, dies

BOSTON (AP) — David Mugar, the businessman and philanthropist who transformed the Boston Pops July Fourth concert and fireworks show from a small local event into a nationally televised extravaganza, has died according to his family. He died Tuesday night, his three children said in a statement. He was 82. No cause of death was […]
13 hours ago
Associated Press

Friend of Florida tax collector in Gaetz case pleads guilty

ORLANDO, Fla. (AP) — A former employee in the office of a Florida tax collector whose arrest triggered an investigation into U.S. Rep. Matt Gaetz has pleaded guilty to fraud and drug charges. Court documents showed that Joseph Ellicott pleaded guilty on Monday to conspiracy to commit wire fraud and honest services fraud and distribution […]
13 hours ago
Associated Press

Guam group fights Air Force plan to blow up bombs, munitions

HONOLULU (AP) — A community group on Guam is challenging the U.S. Air Force’s plans to blow up bombs and other waste munitions at a base on the U.S. territory, saying it could contaminate water supplies and threaten endangered species. The group devoted to protecting Guam’s natural and cultural resources alleged in a lawsuit filed […]
13 hours ago
Associated Press

Navy discharges 1st active duty sailors for vaccine refusal

WASHINGTON (AP) — The Navy said Tuesday that it has discharged 23 active duty sailors for refusing the coronavirus vaccine, marking the first time it has thrown currently serving sailors out of the military over the mandatory shots. It comes as the number of service members being discharged across the services due to the vaccine […]
13 hours ago
Associated Press

UN terminates tech chief after sexual harassment claims

UNITED NATIONS (AP) — Secretary-General Antonio Guterres has terminated the U.N. employment of his undersecretary-general on technology after a yearlong investigation following allegations of sexual harassment, the United Nations announced Wednesday. U.N. spokesman Stephane Dujarric said he could provide no other information about the investigation and reasons for Fabrizio Hochschild’s termination because “the accountability process […]
13 hours ago
Stephen Breyer is the oldest of the sitting Supreme Court justices. (AP Graphic)...
Associated Press

Democrats eye swift confirmation of Biden high court pick

WASHINGTON (AP) — Senate Democrats who have played defense for the last three Supreme Court vacancies plan to move swiftly to replace retiring Supreme Court Justice Stephen Breyer, using the rapid 2020 confirmation of Justice Amy Coney Barrett as a new standard. Barrett was confirmed exactly a month after then-President Donald Trump nominated her to […]
13 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

HVAC upkeep in Arizona saves money, keeps families prepared in the long run

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
...
Arizona State University

Gain insights on next year’s trends at 58th Annual Economic Forecast Luncheon

Employment is recovering from the severe contraction induced by the pandemic, but it is still way below levels at the start of 2020. Can it fully recover in the coming year?
(Facebook Photo/NHTSA)...
Sweet James

Upcoming holiday season is peak time for DUI arrests

The holiday season may be the most wonderful time of the year, but it’s also the most dangerous time of the year to be driving. That’s why it’s important to remember to call Sweet James Accident Attorneys if you’re injured or arrested because of a DUI accident.
Asian shares mixed after omicron worries rattle Wall Street