Share markets face another rough week as uncertainty around Covid Omicron meets a US inflation update on Friday and continuing pressures from energy markets.
Eurozone shares fell 0.6% on Friday, while on Wall Street the S&P 500 lost 0.8% as tech stocks remained under pressure from the mixed November US jobs report which was interpreted as consistent with a faster Fed taper and from the rising fears about the Omicron variant.
Despite this soft global lead ASX 200 futures rose 11 points, or 0.2%, pointing to a slight rise at the start of trade for the Australian share market Monday morning.
Over the week it was the double of Omicron and Fed officials, led by chair Jay Powell who hinted strongly of a faster slowing of the Fed’s bond buying which will bring forward the first rate rise to mid 2022, according to more US analysts.
That of course will be driven by inflation and oil prices which have fallen sharply since Omicron appeared on the scene 10 days ago.
US bond yields fell sharply because of Omicron and despite Friday’s jobs report and the belief that it brought a rate rise closer from the Fed. the yield on the key 10-year bond fell to just over 1.35%, down more than 8 points on the day and over 12 basis points for the week.
The story from the US November jobs data was driven by the headline news of just 210,000 new positions, but for once the sharp fall in unemployment to 4.2% plus the details in the report told a different story (See separate analysis).
So, for the week the S&P 500 fell 1.2%, the Dow lost 0.9% and Nasdaq slid 2.6%. Eurozone shares lost 0.5% and Japanese shares fell 2.5% but Chinese shares rose 0.8%. Omicron seems to hold no fears in China where the latest surveys of economic activity were lacklustre and not very convincing.
The weak global lead and the arrival of Omicron in Australia pushed the Australian share market down 0.5%. 10-year bond yields fell on safe haven buying and a concern the Fed may start to tighten too early.
Iron ore prices rose over the week, but metal prices fell, and oil fell on concerns about the growth outlook with OPEC+ agreeing to proceed with its January supply increase but subject to Omicron’s impact on demand.
The $A fell to 69.69, its lowest since early 2020 on global growth concerns. The $US rose due to haven demand & expectations for a faster Fed taper and helped undermine commodity prices.
