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Stocks slide as Omicron worries bolster safe havens

EconomyDec 17, 2021 04:27PM ET
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2/2 © Reuters. FILE PHOTO: A man wearing a protective mask, amid the COVID-19 outbreak, is reflected on an electronic board displaying stock prices outside a brokerage in Tokyo, Japan, September 21, 2021. REUTERS/Kim Kyung-Hoon 2/2

By David Randall and Tommy Wilkes

NEW YORK (Reuters) -Global stock benchmarks and oil prices fell on Friday while safe havens such as the dollar and Treasury bonds rose as investors wrestled with rising numbers of Omicron cases and a hawkish turn from major central banks in the fight against inflation.

Asian shares closed near lows for the year, and broad-based European stock benchmarks slid 0.5%. Treasury bonds yields touched their lowest levels since early December.

"Central bankers have delivered a hawk for the holidays. The balance of 2021 will be spent focused on the ramifications from Omicron and any associated restrictions and/or delays in the return to normal," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

MSCI's gauge of stocks across the globe shed 0.84%.

On Wall Street, the Dow Jones Industrial Average fell 531.08 points, or 1.48%, to 35,366.56, the S&P 500 lost 48.12 points, or 1.03%, to 4,620.55, and the Nasdaq Composite dropped 10.75 points, or 0.07%, to 15,169.68.

U.S. stocks have reversed all of their gains from Wednesday, when markets welcomed the Federal Reserve's commitment to tackle rising inflation with faster bond tapering and interest rate hikes next year.

The hawkish tilt from central banks this week, including the Fed and the Bank of England and to a lesser degree the European Central Bank, was initially greeted by a wave of buying from investors confident policymakers would curb higher inflation.

But the mood has turned gloomier as traders fret that markets pumped up on cheap money are vulnerable to even the smallest of pullbacks in stimulus.

"Volatility is rising again, lowering the predictability of what may happen next," said Ipek Ozkardeskaya, senior analyst at Swissquote. 

The Bank of Japan dialed back some emergency pandemic funding on Friday but maintained its ultra-loose policy and extended financial relief for small firms, cementing expectations it will remain among the most dovish central banks for the foreseeable future.

Benchmark 10-year notes last rose 5/32 in price to yield 1.4072%, from 1.422% late on Thursday. The dollar index rose 0.728%.

Adding to the caution are worries that rising Omicron infection rates mean a rocky few months for the global economy, although most economists think the damage will be much less severe than in previous waves of COVID-19 cases.

"Ordinarily, in the wake of a more hawkish (Fed) outcome, yields would be expected to rise in anticipation of the Fed tightening cycle," said analysts at Westpac.

"However, there are competing dynamics at present, with ongoing inflation fears sparking the Fed's tougher rhetoric being offset by fears that economic growth will be derailed by Omicron in the near term," they added.

Pfizer (NYSE:PFE) said Friday that the coronavirus pandemic could extend through 2023.

Oil prices fell, with U.S. crude losing 2.72% to $70.41 per barrel and Brent dropping to $73.18, down 2.45% on the day.

Stocks slide as Omicron worries bolster safe havens
 

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Comments (16)
Dave Jones
Dave Jones Dec 20, 2021 7:19PM ET
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they on strike?
William Smith
William Smith Dec 20, 2021 8:55AM ET
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Is anything more worthless than Reuters?
DrFunkenstein hayson
DrFunkenstein hayson Dec 20, 2021 8:02AM ET
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remember two weeks to flatten the curve guys, just two weeks. remember get the vax and this will all go away. remember wear a mask to stop the spread. it's all for the "common good. " pack of ***** lies
DrFunkenstein hayson
DrFunkenstein hayson Dec 20, 2021 7:58AM ET
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the never ending perpetual virus. it never ends, how convenient for the bankers and governments.
Dave Jones
Dave Jones Dec 18, 2021 3:47PM ET
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USD and bonds safe havens? LMAO
Empire Destroyer
Empire Destroyer Dec 18, 2021 10:41AM ET
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Don't get why tech got sold... absolute safe haven if we enter any type of harsh restrictions or lockdown
John Cerniuk
John Cerniuk Dec 18, 2021 10:41AM ET
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its all about interest rates
Will Stewart
Will Stewart Dec 17, 2021 3:14PM ET
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The gov't keeps releasing supposed JFK files, regarding his muhder Yet... according to Surveys and polls, Less than  1% of Americans Believe the CIA's story that a man who's record shows they were one of the Worst shots in the  entire military, Could hit three different people, directly in the skul, from hundreds or thousands of yards away.  And, the CIA went completely out of their way to suppress numerous details Why, even release details....if Less  than 10% of americans believe it??
Iam Suleman
YesomiteSam Dec 17, 2021 3:14PM ET
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So what has that got to do with market slide today?
Will Stewart
Will Stewart Dec 17, 2021 3:14PM ET
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Cause they Just released it
Will Stewart
Will Stewart Dec 17, 2021 3:14PM ET
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Then the market slide
Nuno Cova
Nuno Cova Dec 17, 2021 5:52AM ET
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Crash please, I have a pile of cash waiting to be used.
jose goncalves
jose goncalves Dec 17, 2021 5:52AM ET
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There are big fish waiting for a crash since 2019. So take a sit or go to the queue.
Anjali Panchamukhifp
Anjali Panchamukhifp Dec 17, 2021 5:52AM ET
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sit on put options
Webchow Id
webchow Dec 17, 2021 5:52AM ET
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The indexes are only supported by a few stocks (Apple, MSFT, et cetera). Many stocks are already down 20-30% or more over the past 6 months. Several are approaching 2, 5, and 10 year lows. VIAC for example is at 10 year low and is sub 6 PE. Just how much more of a crash are you expecting?
San Marina
San Marina Dec 17, 2021 5:52AM ET
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You may miss a good dip, and other good dips in the future while every time waiting for a crash that may never come before years from now.
Emin Mammadzada
Emin Mammadzada Dec 17, 2021 5:05AM ET
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Such a ***news headline. We have to wait when this craziness around COVID would settle in and when these Wall Street crooks would understand inflation would be balanced.
jason xx
jason xx Dec 17, 2021 5:05AM ET
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Sorry everybody dying from Covid is such an inconvenience for you.
Matt Novakovich
Matt Novakovich Dec 17, 2021 5:05AM ET
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jason xx your mo th er was an over weight smoker in her 90s
Matt Novakovich
Matt Novakovich Dec 17, 2021 5:05AM ET
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you mean the 50,000,000 abortions?
Darrell Peterson
Darrell Peterson Dec 17, 2021 2:56AM ET
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Ok, I write the next headline for free, here it is: Up is Down, but if Down has the upper hand than Up may have trouble rising unless Down is at a crossroads, in which case Up could end up circumventing Down.
 
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