Omicron jitters, mixed Cenbank decisions drag markets lower

U.S. stocks we seen opening higher on Thursday, continuing the previous session’s strong gains after the Federal Reserve expressed confidence in the strength of the economic recovery, turning more aggressive in the speed of its tapering. At one point yesterday, they traded at just a touch above their previous intraday high, hitting 4743.25, versus the high on Nov. 22 of 4740.50. It was all downhill from there as the S&P 500 fell just over 2% from intraday high to low along with Nasdaq 100 futures, the technology-heavy benchmark sank the most since November on Thursday. The yield on 10-year Treasuries advanced one basis point to 1.42%.

Most stocks are expected to open weak on Friday, as this week’s central bank policy decisions and economic risks from the fast-spreading omicron virus variant sapped sentiment. Europe’s Stoxx 600 index has declined 0.27% as at 10:37am GMT+2), the DAX futures contract in Germany already down 0.2%, CAC 40 futures in France has dropped 0.07% from its opening levels. Two of Europe’s senior central banks took steps to combat surging inflation on Thursday, with the Bank of England raising interest rates for the first time since the pandemic started and the European Central Bank saying it will cut its bond purchases in three months’ time.

Oil prices have begun drifting Friday, putting the market on track for a narrow weekly loss, as surging cases of the Omicron coronavirus variant raised fears new curbs may hit fuel demand, while a weaker dollar supported commodity markets broadly. Brent crude oil prices have dropped 0.34% from its opening levels of $74.50/bbl as at 11:09am (GMT +2) while U.S. West Texas Intermediate (WTI) crude is also trading down 0.76% from its opening levels of $71.94/bbl. Now, Brent seems to be headed for a 1% loss this week, while WTI is poised to finish the week nearly flat.

An extension of the time-bound suspension of debt service due from July 1 will enable Senegal to devote the resources freed to increase spending to mitigate the health, economic and social impact of the Covid-19 crisis, Paris Club says in statement Thursday. The extension was in line with the term sheet of the debt service suspension initiative and its addendum, also endorsed by the G-20.

Zambia increased fuel pump prices as it scrapped subsidies to secure a bailout from the International Monetary Fund. Gasoline and diesel rose respectively by 20% to 21.16 kwacha ($1.29) per liter and by 29% to 20.15 kwacha per liter effective Friday, Reynolds Bowa, who heads the Energy Regulation Board, told reporters in Lusaka, the capital, Thursday. The move comes as the country, which became Africa’s first pandemic-era sovereign defaulter last year, seeks $1.4 billion in funding from the IMF. While the multilateral lender hasn’t publicly flagged Zambia’s energy subsidies as a deal breaker, it’s opposed them in the past. The national power utility owes suppliers about $1 billion, largely because it buys the electricity for more than it sells it.