Fears about Omicron drove equities trading on Thursday, while oil prices fell as OPEC+ decided to keep on increasing crude output despite the new coronavirus variant.
Oil prices had been rising strongly ahead of the meeting of OPEC and its allies amid expectations they would pause their modest monthly crude production increases given the added uncertainty Omicron brings to global demand.
However, prices plunged as the oil producers decided to go ahead with a planned increase of 400,000 barrels per day in January.
“Demand concerns were already on the rise and the last thing crude oil bulls were expecting to hear was another rollover of the current policy from the OPEC+ group,” said analyst Fawad Razaqzada at Think Markets.
“Yet contrary to some expectations for only a moderate hike or no hike at all for January, that’s exactly what happened,” he said.
Razaqzada said the production hike will completely remove the threat of supply shortages at a time when demand is expected to fall.
In equities trading, Wall Street open mixed, with the Dow recovering part of the losses suffered on Wednesday on the news that the Omicron coronavirus variant had been found in the United States.
In European afternoon trading, Frankfurt and Paris shed 1.8 percent and 1.7 percent respectively after a mixed Asian session.
London stocks lost 1.2 percent, with drugmaker GlaxoSmithKline slipping 0.2 percent despite news that its Covid antibody treatment appeared to be effective against the new Omicron variant.
The dollar was mixed on the eve of key US nonfarm payrolls data.
– ‘Spread of new enemy’ –
“The overall tone remains gloomy,” said IG analyst Chris Beauchamp.
“The discovery of US cases of the new variant show that the spread of this new enemy has already begun.”
News that a patient had come down with the new variant sent shivers through US investors on Wednesday who feared authorities will be forced to reintroduce strict containment measures or even lockdowns, derailing the recovery in the world’s top economy.
Washington announced tougher Covid testing rules to travel to the United States.
That comes on top of a widespread belief the Federal Reserve will end its vast bond-buying financial support programme faster than expected and begin hiking interest rates next year to stop inflation — now at a three-decade high — from running out of control.
Traders were already feeling uneasy in recent weeks on concerns about the sharp rise in prices around the world caused by supply chain snarls, a spike in energy costs and a labour shortage.
The announcement about Omicron — and warnings that vaccines may not be as effective against it — sent them over the edge on Friday.
Experts say it will take weeks to fully understand the true danger of Omicron, though the World Health Organization said vaccines would probably fend off the worst of the variant.
– Key figures around 1430 GMT –
London – FTSE 100: DOWN 1.2 percent at 7,083.99 points
Frankfurt – DAX: DOWN 1.8 percent at 15,191.36
Paris – CAC 40: DOWN 1.7 percent at 6,766.04
EURO STOXX 50: DOWN 2.1 percent at 4,091.06
New York – Dow: UP 0.6 percent at 34,214.55
Tokyo – Nikkei 225: DOWN 0.7 percent at 27,753.37 (close)
Hong Kong – Hang Seng Index: UP 0.6 percent at 23,788.93 (close)
Shanghai – Composite: DOWN 0.1 percent at 3,573.84 (close)
West Texas Intermediate: DOWN 2.0 percent to $64.28
Brent North Sea crude: DOWN 1.9 percent at $67.59
Euro/dollar: UP at $1.1339 from $1.1317 at 2125 GMT on Wednesday
Dollar/yen: UP at 112.86. yen from 112.78 yen
Pound/dollar: UP at $1.3310 from $1.3271
Euro/pound: DOWN at 85.19 pence from 85.27 pence
burs-rl/spm
