Asian stock markets followed Wall Street lower on Monday amid concerns over the latest variant of the coronavirus and the Federal Reserve’s stricter policy.
Shanghai, Tokyo, Hong Kong and Sydney fell at the start of a stock market week which will be cut short by the Christmas holidays.
Wall Street fell on Friday as traders pulled money off the table after the Fed said it would fight inflation by speeding up the withdrawal of economic stimulus.
The spread of the omicron variant has fueled fears that new restrictions on business and travel could worsen supply chain disruptions and spur inflation.
“Omicron threatens to be the Grinch to steal Christmas,” Mizuho Bank’s Vishnu Varathan said in a report. “The jury is out, which fits with a market that prefers security to unpleasant surprises.”
The Shanghai Composite Index fell 0.5% to 3,613.50 and the Nikkei 225 in Tokyo fell 1.7% to 28,055.28. The Hang Seng in Hong Kong fell 0.9% to 22,976.86.
Seoul’s Kospi was down 1.4% to 2,975.70 and Sydney’s S & P-ASX 200 was down 0.2% to 7,288.30.
New Zealand won while Singapore and Jakarta retreated.
The US government on Sunday warned of a possible wave of “revolutionary infections” due to Americans traveling for the Christmas and New Year holidays.
Stocks rallied briefly, then fell last week after Fed officials said they were ready to accelerate the withdrawal of stimulus that boosted financial markets.
Also potentially weighing on sentiment, a US senator said on Sunday he would not support President Joe Biden’s $ 2 trillion infrastructure, social spending and climate plan. Joe Manchin’s announcement may doom the plan’s chances in the equally divided Senate.
On Friday, Wall Street’s benchmark S&P 500 fell 1% to 4,620.64, marking its third losing week of the past four. The index is 2% below its all-time high and up 23% for the year.
The Dow Jones Industrial Average fell 1.5% to 35,365.44. The Nasdaq, dominated by technology stocks, slipped 0.1% to 15,169.68.
Fed officials said on Wednesday it could speed up curtailment of bond purchases that inject money into financial markets and keep interest rates low. This sets the stage for the Fed to start raising rates next year.
Inflation has been a growing concern throughout 2021. Higher raw material costs and supply chain issues have increased overall costs for businesses, which have raised commodity prices to offset the impact. .
Consumers have so far absorbed these price increases, but they face persistent upward price pressure and this could eventually lead to lower spending. Any decline in spending could then dampen economic growth.
In energy markets, benchmark US crude lost $ 1.76 to $ 68.96 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell from $ 1.52 on Friday to $ 70.86. Brent crude, the basis of international oil prices, fell $ 1.69 per barrel to $ 71.83 in London. It lost $ 1.50 the previous session to $ 73.52 a barrel.
The dollar fell to 113.54 yen from 113.70 yen on Friday. The euro remained stable at $ 1.1251.