Investor sentiment sagged Monday amid turmoil for President Joe Biden’s economic agenda and rising global omicron infections, spurring selloffs in stocks, equity futures and oil while bolstering sovereign bonds.
S&P 500, Nasdaq 100 and European futures slid at least 1%, and MSCI Inc.’s gauge of Asia-Pacific equities was set for its worst drop since March. Treasuries led global bonds gains and the dollar held a jump from Friday.
Senator Joe Manchin blindsided the White House on Sunday by rejecting Biden’s roughly $2 trillion tax-and-spending package, leaving Democrats with few options for reviving it. Goldman Sachs Group Inc. economists reduced their U.S. economic growth forecasts in the wake of the senator’s move.
Fresh lockdowns in parts of Europe to stem the rapid spread of omicron are also unsettling investors. In China, banks lowered the one-year loan prime rate, a key benchmark of borrowing costs, for the first time in 20 months. But that did little to shore up risk appetite.
Crude oil slid on worries that mobility curbs to tackle the strain will hurt demand. Commodity-linked currencies struggled, while the yen strengthened.
For more market analysis, read our MLIV blog.
What to watch this week:
- Reserve Bank of Australia releases minutes of its December interest rate meeting. Tuesday
- EIA crude oil inventory report Wednesday
- Bank of Japan Governor Haruhiko Kuroda speaks Thursday
- U.S. consumer income , new home sales, U.S. durable goods, University of Michigan consumer sentiment, initial jobless claims. Thursday
- Friday: US markets are closed. European markets close earlier
Some of the main moves in markets:
- S&P 500 futures fell 1.3% as of 6:50 a.m. in London. The S&P 500 fell 1% Friday
- Nasdaq 100 futures fell 1.2%. The Nasdaq 100 fell 0.4% Friday
- Japan’s Topix index lost 2.2%
- Australia’s S&P/ASX 200 Index slid 0.2%
- South Korea’s Kospi index declined 1.8%
- Hong Kong’s Hang Seng Index fell 2%
- China’s Shanghai Composite Index declined 1.1%
- Euro Stoxx 50 futures declined 2.3%
- The Japanese yen was at 113.45 per dollar, up 0.2%
- The offshore yuan was at 6.3874 per dollar
- The Bloomberg Dollar Spot Index was little changed
- The euro was at $1.1254
- The yield on 10-year Treasuries fell four basis points to 1.36%
- Australia’s 10-year bond yield declined five basis points to 1.54%
- West Texas Intermediate crude fell 3.9% to $68.12 a barrel
- Gold was at $1 802.07 an ounce, up 0.2%