Asian shares mixed after omicron worries rattle Wall Street

By YURI KAGEYAMA

TOKYO (AP) — Asian shares were mixed Wednesday amid tense trading owed to worries implicit the newest coronavirus variant.

Japan’s benchmark Nikkei 225 was up 0.8% successful greeting trading to 28,062.99, aft gyrating earlier successful the session. South Korea’s Kospi jumped 1.1% to 2,869.67. Australia’s S&P/ASX 200 dipped 0.4% to 7,229.40. Hong Kong’s Hang Seng gained 1.3% to 23,787.71, portion the Shanghai Composite was small changed, inching down little than 0.1% to 3,563.03.

The detection of the omicron variant successful Japan, arsenic good arsenic Brazil, announced Tuesday, has raised fears that further measures to incorporate infections would squelch tourism and different economical activity. Experts accidental it whitethorn instrumentality weeks earlier they cognize much details astir whether the omicron variant causes superior illness.

Anderson Alves, a trader astatine ActivTrades, said Asian markets were tense aft an overnight descent connected Wall Street and comments from Moderna’s CEO that existing COVID-19 vaccines whitethorn beryllium little effectual with omicron than earlier variants.

“Traders volition look for caller insights regarding the caller variant and its interaction connected the existent vaccine framework,” Alves said.

Wall Street’s losses deepened aft the caput of the Federal Reserve said it volition see shutting disconnected its enactment for fiscal markets sooner than expected.

The S&P 500 fell 1.9%, erasing its gains from a time earlier. The sell-off accelerated aft Fed Chair Jerome Powell told Congress the cardinal slope whitethorn halt the billions of dollars of enslaved purchases it’s making each period “perhaps a fewer months sooner.” It had been connected gait to wrapper up the purchases, meant to goose the system by lowering rates for mortgages and different semipermanent loans, successful June.

An extremity to the purchases would unfastened the doorway for the Fed to rise short-term involvement rates from their grounds debased of astir zero. That successful crook would dilute a large propellant that has sent stocks to grounds heights and swatted distant concerns astir an overly pricey market. As investors moved up their expectations for the Fed’s archetypal complaint hike pursuing Powell’s remarks, yields connected short-term Treasuries rose.

Losses for stocks mounted quickly, with the driblet for the Dow Jones Industrial Average much than tripling successful fractional an hr arsenic it sank 711 points. The bluish spot scale ended down 652.22 points, oregon 1.9%, astatine 34,483.72.

The Nasdaq composite held up somewhat amended than the remainder of the market, shedding 245.14 points, oregon 1.6%, to 15,537.69. Higher involvement rates thin to wounded banal prices broadly, but they deed hardest those seen arsenic the astir costly oregon banking connected large nett maturation the furthest successful the future. Such companies play a bigger relation successful the Nasdaq than different indexes. Microsoft fell 1.8% and chipmaker Nvidia slid 2.1%.

The whammy connected involvement rates came aft stocks were already anemic successful the greeting owed to concerns astir however severely the fast-spreading omicron variant of the coronavirus whitethorn deed the planetary economy.

Much is near to beryllium determined astir the variant, including however overmuch it whitethorn dilatory already gummed-up proviso chains oregon scare radical distant from stores. That uncertainty has sent Wall Street done up-and-down jolts arsenic investors conflict to handicap however overmuch economical harm omicron volition yet do.

“There volition beryllium heightened volatility astir immoderate portion of information,” said Kristina Hooper, main planetary marketplace strategist astatine Invesco. She said markets volition apt stay cautious “before we cognize more.”

The S&P 500 dropped 88.27 points to 4,567. The benchmark scale sank 2.3% Friday for its worst nonaccomplishment since February, lone to emergence 1.3% Monday arsenic investors reconsidered whether the absorption was overdone, earlier giving mode to Tuesday’s loss. The scale closed retired November with a 0.8% loss. That follows a 6.9% summation successful October and a 4.8% driblet successful September. The scale is present up 21.6% for the year.

One measurement of nervousness successful the banal marketplace jumped astir 19% Tuesday, nearing its level from Friday, erstwhile it touched its highest constituent since March. Much of the emergence occurred aft Powell began speaking.

Gold usually does good erstwhile fearfulness among investors is rising, but its terms slipped 0.5%. Higher involvement rates could trim the entreaty of gold, which doesn’t wage its holders immoderate interest.

If omicron does yet bash dense harm to the planetary economy, it could enactment the Federal Reserve successful a hard spot. Usually, the cardinal slope volition little involvement rates, which encourages borrowers to walk much and investors to wage higher prices for stocks.

But debased rates tin besides promote inflation, which is already precocious crossed the planetary economy. Powell acknowledged successful his grounds earlier Congress that ostentation has been worse and lasted longer than the Fed expected. For months, officials described ostentation arsenic lone “transitory,” but Powell said that connection nary longer works.

The consequent losses for stocks Tuesday were widespread, with each but 7 stocks successful the S&P 500 ending lower. Apple roseate 3.2% for the biggest summation successful the index.

Smaller stocks besides took dense losses. The Russell 2000 scale slid 43.07 points, oregon 1.9%, to 2,198.91. Investors typically spot them getting wounded much than their larger rivals by some higher involvement rates and by a weaker U.S. economy.

One awesome successful the enslaved marketplace was besides flashing immoderate interest astir the economy’s prospects. Longer-term Treasuries usually connection higher yields than shorter-term Treasuries, successful portion to marque up for the accrued hazard that aboriginal ostentation whitethorn devour into their returns.

A 10-year Treasury is inactive offering much successful output than a two-year Treasury, but the spread narrowed sharply connected Tuesday. The two-year output roseate to 0.54% from 0.51% precocious Monday. The 10-year yield, meanwhile, fell to 1.45% from 1.52%.

In vigor trading, benchmark U.S. crude added $1.42 to $67.60 a barrel. Brent crude, the planetary standard, fell $2.87 to $70.57 a barrel.

In currency trading, the U.S. dollar gained to 113.44 Japanese yen from 113.18 yen. The euro outgo $1.1322, down from $1.1339.

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AP Business Writers Damian J. Troise, Stan Choe and Alex Veiga contributed.