In European trading Monday, Dow Jones prices tumbled quite so much as 610 points, as traders were alarmed by the rapid spread of Omicron and Sen. Joe Manchin’s likely demise of President Joe Biden’s $1.75 trillion “Building Back And better” plan. As of 5.50 a.m. ET Monday, futures trading on the Dow Jones industrial companies were off 1.24 percent, or 437 points, after falling as high as 1.72 percent, or 608 points earlier.
The S&P 500 slid 1.37 percent, while Nasdaq 100 futures sank 1.56 percent. Minimal volumes, according to experts, are contributing to the uncertainty. Moreover, the drop happened after the major US market indices ended a tumultuous week with a loss.
Stocks in Europe fell sharply at the beginning of the day as authorities debated whether to impose more restrictions on migration and the economy to slow the transmission of the Omicron coronavirus type. The Stoxx 600 index fell 1.6 percent throughout Europe, reversing a 2.46 percent dip earlier. The FTSE 100 index in London fell 1.17 percent. Overnight, Asian stocks fell as well. Although the central bank decreased a benchmark interest rate, the 1-year Loan Prime Rate, by five basis points, China’s CSI 300 fell 1.5 percent. The Nikkei 225 index in Tokyo lost 2.13 percent.
Initially found in South Africa at the end of November, the Omicron strain is ravaging the United Kingdom and is fast-moving across the United States and Europe. According to Anthony Fauci, the President’s senior medical adviser, as Omicron cases proliferate, US hospitals might become “extremely pressured” in a week or two. However, he added a lockdown is improbable. The Dutch government implemented a new lockdown from Sunday, and several countries have barred travel from the United Kingdom. In addition, investors are concerned about the new variant’s impact on the economy.
In a statement, Jeffrey Halley, senior financial analyst at Oanda, wrote, “Markets will be for day-traders with steely nerves and deep funds for the coming two weeks” Due to the fact that Christmas Day falls on a Saturday, the financial markets in the United States will be closed on Friday, December 24.
Investors were also concerned about remarks made by Manchin, a Democratic senator from West Virginia, which effectively killed Biden’s nearly $2 trillion expenditures and climate plan. Manchin said Fox News, “I cannot vote to approve this bit of legislation.” Following Manchin’s move, Goldman Sachs lowered its projection for the US GDP. The bank now expects 2% growth in the first quarter, down from 3% in the prior quarter. It also lowered its expectations for the second and third quarters.
Investors are also thinking about central bankers’ final turn toward a more complex approach to inflation in 2022. After inflation reached a record high the other week, the Bank of England became the first global central bank to increase interest rates. As a result, the Federal Reserve is talking harsher about pricing today, with the market split as to whether the first interest rate increase would be in March or May.
As investors sought the safety of government bonds, bond yields plummeted. The benchmark 10-year US Treasury note rate fell 13 basis points to 1.389 percent last week. Yields follow prices in the reverse direction. Oil prices plummeted as speculators predicted that new coronavirus regulations would reduce demand for fuel. Brent crude down 3.24 percent to $71.14 per barrel, while WTI crude fell 3.94 percent to $60.07 per barrel.