Omicron Case Shakes the Market; The Risk Sentiment of US Stocks May Dominates Asia-Pacific Market

2021-12-02 17:21:30

Summary

On Wednesday (December 1), the US dollar rebounded from its decline. Earlier, there were reports that the Omicron variant virus was spreading; the yen led the rise of developed market currencies, and risky currencies fell. Gold futures closed higher. Investors were worried about the impact of the Omicron variant and bought gold to hedge a wider range of market fluctuations. Oil prices fell sharply after the surge. U.S. oil closed down 1%, wiping out the 5% increase in the intraday market. The news of the first case of omicron variants discovered in the United States shocked the market before OPEC met tomorrow to discuss production arrangements.

The U.S. stock market recorded its biggest two-day decline since October 2020. After the U.S. confirmed the first case of infection with the omicron mutant strain, traders assessed the latest developments in the epidemic. In the past two trading sessions, the S&P 500 index futures has fallen by 3.06%, the largest two-day drop since October 2020. Investors flock to the relatively safe bond market, pushing long-term bond prices up at the expense of falling yields. The closing price of the VIX panic index also hit its highest level since early February.


South Africa said the number of COVID-19 cases has almost doubled from Tuesday, and the number of cases infected with the new variant strain in the United Kingdom, Switzerland and Brazil has also risen sharply. Traders also evaluated the speech of Fed Chairman Powell. He once again emphasized that the Fed will control inflation and officials should consider accelerating the reduction.


The selling on Wall Street is mainly due to two key factors. The first is the relative hawkish stance of the Federal Reserve (FED). Fed Chairman Jerome Powell reiterated that it is appropriate to consider accelerating the pace of reducing asset purchase plans. Earlier this week, Powell no longer used the term "temporary" when explaining the average price growth in the United States.


The second is the first confirmed case of Omicron mutant strain (Omicron) in the United States. This may pose a certain degree of threat to the gradual reopening of the world. Obviously, some of the worst performing stocks are in the travel industry. The Russell 2000 index, which is dominated by small-cap companies, closed at its lowest level since August after a sharp drop of 2.34%.


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