Text size
Stock markets were in full hangover mode Friday, after the brief post-Fed euphoria that seized investors, on the apparent determination of the world’s major central banks to ignore for now the possible threat of the Omicron variant, and focus instead on inflation risks.
U.S. stock markets were seen opening flat or down, with the Dow Jones Industrial Average futures 0.1% down and S&P500 futures 0.3% lower and Nasdaq futures falling 0.9%.
Tech stocks had taken a beating after investors’ change of mind Thursday, with the
Nasdaq
closing the session down 2.5%, as the
Dow Jones Industrial Average
ended the trading session stable while the
S & P 500
was falling by 0.9%.
Central bankers’ hawkish tilt, after the Federal Reserve’s decision Wednesday to accelerate the end of quantitative easing and to pencil in three interest rates increase for next year, and the Bank of England’s own rate increase from 0.1% to 0.25%, finally caught up with investors.
The Central Bank of Japan Friday however seemed to side with the European Central Bank by striking an overall dovish tone, even as it announced it would pull back some of its emergency pandemic funding. Haruhiko Kuroda insisted that monetary stimulus would continue, and that borrowing costs would remain low in the months to come.
“Inflation risks have become too big an elephant in the room to ignore by central banks (…) The main difference between them is how much of a downside risk they attach to the current developments of the pandemic,” ING analysts wrote.
Investors were also bracing for more volatility in the months ahead, as central banks pull the extraordinary liquidity they unleashed on markets in the last two years to help the world economy counter the impact of the Covid-19 pandemic.
Asian stocks were nearing 13-month lows Friday, with Japan’s
Nikkei 225
index closing down 1.8%, and Hong Kong’s
Shanghai composite
both down 1.2%.
European markets followed the general trend, with the pan-European Stoxx 600 index down 0.6% in early trading and Italy’s
Milan bourse
leading the movement with a 1% fall.
Car stocks were leading the decline across the region, with
Volkswagen
down 2.6%.
BMW
falling 2.2%, and Mercedes maker
Daimler
down 2.2%.
General Motors
fell 2.5% in premarket trading.
Shares in electronic medical records company
Cerner
jumped 18% after The Wall Street Journal reported that software maker
Oracle
was in talks to acquire the company in a deal that would value it at around $30 billion.
U.S. delivery group
FedEx
was up 4.8% in premarket trading after the company reinstated its original 2022 fiscal forecast after easing concerns about labor shortages.
Shares in
Rivian
were falling 10% in the premarket after the electric vehicle company acknowledged, in its first result presentation since listing, that expected production this year would fall short of target, and disappointed investors with preorder numbers below forecast.
U.S. Steel
was down 6% after publishing lower-than-expected fourth quarter guidance for its earnings before interest, taxes depreciation and amortization (EBITDA).
Oil prices were falling, with Brent crude down 1.5% to $73.89 a barrel and U.S. crude losing 1.4% to $71.35 a barrel.