Asian stocks fall on concern about virus, tighter Fed policy

Beijing: Asian stock markets followed Wall Street lower on Monday amid concern about the coronavirus’s latest variant and tighter Federal Reserve policy.

Shanghai, Tokyo, Hong Kong and Sydney retreated at the start of a trading week that will be shortened by the Christmas holiday.

Wall Street fell Friday as traders took money off the table after the Fed indicated it would fight inflation by speeding up withdrawal of economic stimulus.

The spread of the omicron variant has fueled fears that renewed curbs on business and travel might worsen supply chain disruptions and boost inflation.

Omicron threatens to be the Grinch to rob Christmas, Mizuho Bank’s Vishnu Varathan said in a report. The jury is out, which squares with a market that prefers safety to nasty surprises.

The Shanghai Composite Index fell 0.5 per cent to 3,613.50 and the Nikkei 225 in Tokyo tumbled 1.7 per cent to 28,055.28. The Hang Seng in Hong Kong sank 0.9 per cent to 22,976.86.

The Kospi in Seoul retreated 1.4 per cent to 2,975.70 and Sydney’s S&P-ASX 200 lost 0.2 per centto 7,288.30.

New Zealand gained while Singapore and Jakarta retreated.

The U.S. government warned Sunday of a possible surge of breakthrough infections due to Americans traveling for the Christmas and New Year holidays.

Stocks briefly rallied but then fell last week after Fed officials said they were willing to speed up withdrawal of stimulus that has boosted financial markets.

Also potentially weighing on sentiment, a U.S. senator said Sunday he wouldn’t support President Joe Biden’s USD 2 trillion infrastructure, social spending and climate plan. Joe Manchin’s announcement possibly dooms the plan’s chances in the evenly split Senate.

On Friday, Wall Street’s benchmark S&P 500 index fell 1 per cent to 4,620.64, turning in its third losing week out of the past four. The index is 2 per cent below its all-time high and up 23 per cent for the year.

The Dow Jones Industrial Average fell 1.5 per cent to 35,365.44. The Nasdaq, dominated by tech stocks, slipped 0.1 per cent to 15,169.68.

Fed officials indicated Wednesday it might accelerate the reduction of bond purchases that inject money into financial markets and keep interest rates low. That sets the stage for the Fed to begin to raise rates next year.

Consumers have so far absorbed those price increases, but they are facing persistent pressure from rising prices and that could eventually prompt a pullback in spending. Any pullback in spending could then crimp economic growth.

In energy markets, benchmark U.S. crude lost USD 1.76 to USD 68.96 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell USD 1.52 on Friday to USD 70.86. Brent crude, the price basis for international oils, sank USD 1.69 per barrel to USD 71.83 in London. It lost USD 1.50 the previous session to USD 73.52 per barrel.

The dollar declined to 113.54 yen from Friday’s 113.70 yen. The euro held steady at USD 1.1251.