Global stocks wobble as Didi delisting revives U.S.-China worries
By Tom Westbrook
SYDNEY, Dec 3 (Reuters) - Stocks fell on Friday after Chinese ride-hailing giant Didi said it would delist in New York, renewing concern about U.S.-China tensions and tech regulation, while oil headed for a sixth consecutive weekly drop on Omicron and rate hike worries.
S&P 500 futures ESc1 fell about 0.5%. Hong Kong's Hang Seng .HSI dropped 1.3%, dragged by big tech names. MSCI's index of Asia shares outside Japan .MIAPJ0000PUS fell 0.7%.
The risk-sensitive Australian dollar AUD=D3 fell 0.3% and at just below 71 cents is close to a one-year low.
Didi DIDI.N ran afoul of Chinese regulators by pushing ahead with its $4.4 billion U.S. IPO in July and said on Weibo it was looking to move its listing to Hong Kong.
"Delistings starting to happen gives some jitters over the uncertainty as to how this impacts on the broader U.S.-China picture," said Bank of Singapore analyst Moh Siong Sim.
The news about Didi comes a day after Singapore-based ride-hailing and delivery firm Grab GRAB.O slid more than 20% on its Nasdaq debut. The listing is the biggest on Wall Street by a Southeast Asian firm.
More broadly markets have lurched around on little hard news about Omicron this week, driving the CBOE volatility index .VIX toward its biggest one-week leap since the pandemic chaos of February 2020. Short-term yields have also jumped as investors bet on higher rates, even with the Omicron uncertainty.
Traders will need to wait at least another week or so for an early read on the variant's virulence or vaccine resistance. U.S. labour data due later on Friday is also in focus as a guide to rates.
Benchmark brent crude futures LCOc1 finished higher overnight at $69.67 a barrel, but have dropped more than 3% this week and are down more than 18% from October's three-year high.
So far, in the absence of Omicron details some governments have scrambled to shut borders anyway. But other policymakers - most notably the Federal Reserve - are cautiously proceeding apace with plans to move away from crisis-mode responses.
Fed Chair Jerome Powell said central bankers will talk about a faster pullback to bond buying at this month's meeting and stop describing inflation as transitory. Oil cartel OPEC is going ahead with planned production increases.
"The Fed is not ignoring the threat from Omicron, but are choosing not to let it delay policy responses that suggest a more business as usual outlook," said Commonwealth Bank of Australia strategist Tobin Gorey.
"OPEC+ has done a similar thing," he added. "Neither has iced their planned policy changes...and both are perhaps examples that suggest lockdown responses to epidemic surges are becoming less likely."
The bond market's response to Powell's hawkish shift has been to jack up short term rates and push down long ones, reckoning that sooner hikes will end up curbing future inflation and growth, and sharply flattening the U.S. yield curve.
Two-year Treasury yields US2YT=RR were steady in early Asia trade for a weekly gain of nearly 10 basis points.
Benchmark 10-year Treasury yields US10YT=RR , on the other hand, have dropped nearly 6 bps to 1.4291% this week and 30-year yields US30YT=RR are down 7.3 bps to 1.7545%.
"It's inflation, not growth, which is making the Fed accelerate tightening plans," said Kit Juckes, a strategist at Societe Generale in London.
"For the first time in ages, the risk to this U.S. economic cycle is that it comes to an end sooner than consensus forecasts expect," he said, forecasting that the U.S. dollar's upward momentum could slow into a peak around the middle of next year.
Investors sold riskier currencies on Friday. The risk-sensitive Australian and New Zealand dollars lost about 0.3% each. The euro EUR=EBS was steady at $1.1298 and the yen JPY=EBS firm at 113.08 per dollar.
World FX rates YTD Link
Global asset performance Link
Asian stock markets Link
Reporting by Tom Westbrook; Editing by Sam Holmes
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.