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After their biggest losses in a year on Friday, stock markets appear to be stabilising as investors seek more information about the Omicron variant that is prompting some governments to bring in new travel rules, and could threaten the global recovery.
Asia-Pacific markets have dropped further today, with Japan’s Nikkei losing another 1.6%, as Tokyo’s government announced it is temporarily shutting its borders to foreign visitors.
Hong Kong’s Hang Seng is down 1.1%, and South Korea’s KOSPI dipping 0.9%.
Travel and hospitality stocks were hit by investor concerns over the spread of Omicron around the world, which has also prompted Israel to bar entry to all foreign nationals and Morocco to suspend all incoming flights for two weeks,
Japan Airlines’s shares are down 4%, with Hong Kong’s Cathay Pacific losing 3.8%, and Korean Air dropping 2.4%
Australia’s Qantas Airways slid 6% at the open, before recovering to be down just 2%
Hong Kong-listed casino shares were also down on concerns surrounding the virus, and reports that an arrest warrant has been issued for the head of Macau’s largest junket group for cross-border gambling activities(Marketwatch has more details).
But the futures markets is signaling that Wall Street will rebound, after the Dow fell 2.5% on Friday in its worst drop of the year, accentuated by the Thanksgiving holiday.
European markets are set to rise too, after Friday’s plunge which saw £72bn wiped off the UK’s leading share index in its biggest percentage fall in over a year.
The blue-chip FTSE 100 is expected to rally by over 1%, recovering a chunk of Friday’s losses.
Jeffrey Halley, senior market analyst at OANDA, says some traders are optimistic, even though we simply don’t know whether Omicron is “delta 2.0, or a more benign version”.
As the week starts anew, it is a very mixed performance in Asia today. Over the weekend, the WHO said that omicron’s symptoms appear to be mild, and the head of Moderna said a newly rejigged version of their vaccine could be available by early 2022.
That seems to have been enough to flush out the perpetual optimists of the US stock market, with US index futures strongly rallying this morning.
Halley cautions, though, that the prospect of the pandemic resurging is hitting
Having moved heaven and earth over the past six months to get vaccination rates across the region to impressive levels, the prospect of them being rendered useless and trade suffering is understandably weighing on sentiment.
The first move in early Asia on Monday is often the wrong one. If that plays true today, the early optimism shown in the most illiquid time of the week for global markets, could evaporate as the day goes on. It is hard to see Europe for example, already facing another Covid-19 wave and more restrictions, suddenly finding light at the end of the virus tunnel.
G7 health ministers are due to hold an emergency meeting today about Omicron, as experts race to determine the level of threat posed by the new strain.
- 9.30am GMT: Bank of England’s mortgage approvals and consumer credit report for October
- 10am GMT: Eurozone consumer and business confidence report
- 1pm GMT: Germany’s inflation rate for November (preliminary estimate)
- 3pm GMT: US pending home sales for October