Global sharemarkets quiet as Covid-19 cases keep climbing
Markets were little changed amid year end holidays in many countries on Monday but surging coronavirus infections had potential to cause some volatility.
Global financial markets were little changed amid year-end holidays in many countries at the start of the week, although surging coronavirus infections had potential to cause increased volatility.
Australia’s sharemarket was closed in observance of Christmas Day and will remain closed on Tuesday along with markets in New Zealand, Hong Kong, the UK and Canada. However, the US and most European markets reopened on Monday.
Investors were digesting weekend news that daily cases of the Covid-19 Omicron variant had surpassed those of the Delta wave and US airlines had scrapped more than 2800 flights for the holiday weekend due to personnel shortages caused by the spike in cases.
“Omicron cases are surging in the US and Europe, and although markets have well and truly priced in a less virulent strain, the disruption to goods and services from isolating workers, notably air travel, seems to be the main fallout so far,” said Jeffrey Halley, a senior Asia-Pacific market analyst at OANDA.
“That is only likely to cause short-term nerves, with the global recovery story for 2022 still on track.”
Crude oil prices showed some strain, with West Texas Intermediate crude futures falling 1.3 per cent to $US72.81 a barrel in Asia-Pacific trading after hitting a four-week high of $US73.95 on Friday amid an improvement in sentiment caused by a US inventory drawdown last week.
The US sharemarket was closed on Friday in observance of Christmas Day.
China’s sharemarket fell slightly on Monday, with the Shanghai Composite index down 0.2 per cent after China said Covid cases in the nation had hit the highest level since last January.
Chinese authorities reported 162 locally transmitted cases and started widespread disinfection measures in the western city of Xi’an, where an outbreak threatened China’s zero Covid-19 policy.
Singapore said foreigners wanting to work, study or live in the country must be vaccinated, amid a tightening of restrictions in the country. The FTSE Straits Times index was little changed.
China reported a healthy 38 per cent rise in industrial profits for the year to date, well above a 34 per cent increase expected by economists.
“Uncertainty in the property sector continues to drag on otherwise strong data,” OANDA’s Mr Halley said. The People’s Bank of China on Saturday said that they would safeguard the legal rights of home buyers and provide greater support for the real economy.
“The divergences in global monetary policy are set for a sharper turn heading into the new year, especially after the PBOC’s announcement that it will remain ‘proactive’ in its use of monetary policy tools,” Mizuho Bank said in a commentary. “With Omicron cases rising across China, pushing regions into lockdowns and tighter social restrictions, a case for additional growth support is increasingly clearer,” it said.
China Evergrande vowed to ensure it would deliver 39,000 apartments in December.
The Aussie dollar was trading around US72.3c after hitting a five-week high of US72.52c last week. Iron ore prices were coming into focus with Singapore futures down 4.3 per cent to $US121.90 a tonne on Monday after a six-week rise in the commodity. Spot gold was little changed around $US1809.50 and bitcoin oscillated around $US51,000.
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