Stocks fall and oil prices fall as storm clouds gather


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The Dow fell more than 650 points, or 1.9%, in late morning trade on Monday. The S&P 500 was down 1.8%, while the tech-heavy Nasdaq was also down 1.8%.
On Friday, the Dow lost 532 points, or 1.5%. It was the worst drop in three weeks. The S&P 500 closed 1%. Both are still sitting on healthy growth for the year to date.

Two factors appeared to be driving Monday’s losses.

More and more cases of the Omicron variant in Europe and the United States are already striking businesses, forcing governments to tighten activity restrictions at a critical time of year for the leisure and retail industries. And the outlook for the US economy has deteriorated after Democratic Senator Joe Manchin said he would oppose the Biden administration’s $ 1.75 trillion “Build Back Better” bill.

“A combination of growing Omicron nerves, particularly in the UK and Europe, and the failure of President Biden’s spending plan … resulted in Asian stocks being propelled straight south in sympathy with the end of Wall Street on Friday,” wrote Jeffrey Halley, senior market analyst. Asia Pacific, in Oanda.

Goldman Sachs wasted no time in cutting its growth forecast for the US economy following Manchin’s announcement in Fox News on Sunday. The Wall Street firm told its customers it no longer believes that President Joe Biden’s signature legislation will get through Congress.

Citing the “apparent demise” of Build Back Better, Goldman Sachs now expects US GDP to grow 2% on an annualized basis in the first quarter, up from 3% previously.

Adding to the growing gloom is the threat Omicron poses to business. The highly transmissible variant had been identified in at least 45 states as well as in Puerto Rico and Washington DC by Sunday. And with Delta still present, Covid-19 cases are increasing in some areas. New York set a new record for one-day Covid-19 cases on Sunday for the third day in a row, according to Governor Kathy Hochul’s office.

Amsterdam on the first day of lockdown in the Dutch capital, introduced to combat the new variant of Omicron.

Omicron is also spreading rapidly in Europe, causing governments across the region to introduce new measures to restrict travel and social activities. The Netherlands imposed a strict lockdown on Sunday, while France said on Friday it would ban large events and outdoor gatherings on New Years Eve. Denmark has closed cinemas and theaters and limited the number of people in shops this week.

Germany, the largest economy in the region, is already on the verge of a recession.

“Even if booster vaccinations are effective in reducing medical risks, a rapid spread of Omicron could overload health systems and force countries to follow the Netherlands and introduce more economically damaging restrictions,” Berenberg chief economist Holger Schmieding wrote in a research note on Monday.

Xi Jinping has taken on China's capitalists.  That is why that will change in 2022
If so, both the euro area and the UK could see their economies shrink 1% in the first quarter of 2022 compared to the last three months of this year, he added.

British Deputy Prime Minister Dominic Raab told Sky News on Monday that he could not rule out the possibility of further Covid-19 restrictions being introduced in England before Christmas.

Davos delayed

The World Economic Forum announced on Monday that its

“Current pandemic conditions make it extremely difficult to hold a global face-to-face meeting,” said a statement from the forum, citing Omicron’s impact on travel.

In London, some bars and restaurants have had to close due to rising infections among staff and falling customer numbers. Six English Premier League football games were postponed over the weekend due to player failure due to Covid-19.

China is already experiencing a severe economic slowdown marked by a housing crisis, crackdown on private companies, Covid-19 outbreaks that have disrupted manufacturing and shipping, and a power shortage. Analysts say the world’s second largest economy could grow as slowly next year as it has since 1990.

The People’s Bank of China cut its key lending rate for the first time in 20 months on Monday, but the relief in the equity markets quickly faded.

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