WORLDWIDE: HEADLINES
Wall St Week Ahead ‘Santa Claus’ stocks rally? Investors look to Omicron for direction
Investors are closely watching the latest data on the rapidly spreading Omicron variant for signs of how much the virus could impact the U.S. economy and earnings as the market heads into what has historically been a strong time of year for equities.
Overall, the S&P 500 is down only 0.1% since the Omicron variant was identified on Nov. 24. Travel and tourism stocks that would be most affected by a slowdown in consumer spending have slid more than the broad market, with the Invesco Dynamic Leisure and Entertainment ETF down 1.1% over the same time.
“The market is extremely reactionary now and every little bit of news has a huge impact,” said George Young, a portfolio manager at Villere & Co. Young is planning on taking advantage of any Omicron-induced volatility to add to stocks that rely on tourism and travel such as bank company First Hawaiian Inc (FHB.O). Shares of the company are up 14.4% for the year to date.
The Omicron variant is causing infections to double in 1.5 to 3 days, according to the World Health Organization. The variant now accounts for 73% of all new U.S. cases, up from less than 1% at the beginning of the month.
Still, questions about Omicron’s virulence have made investors less pessimistic than the original reaction when the S&P 500 fell 2.3% when the variant was discovered on fears of fresh economic lockdowns.
Full coverage: REUTERS
Tencent hands shareholders $16.4 bln windfall in the form of JD.com stake
Chinese gaming and social media company Tencent (0700.HK) will pay out a $16.4 billion dividend by distributing most of its JD.com (9618.HK) stake, weakening its ties to the e-commerce firm and raising questions about its plans for other holdings.
The move comes as Beijing leads a broad regulatory crackdown on technology firms, taking aim at their overseas growth ambitions and domestic concentration of market power.
Tencent said on Thursday it will transfer HK$127.69 billion ($16.37 billion) worth of its JD.com stake to shareholders, slashing its holding in China’s second-biggest e-commerce company to 2.3% from around 17% now and losing its spot as JD.com’s biggest shareholder to Walmart (WMT.N).
The owner of WeChat, which first invested in JD.com in 2014, said it was the right time for the divestment, given the e-commerce firm had reached a stage where it can self-finance its growth.
Chinese regulators have this year blocked Tencent’s proposed $5.3 billion merger of the country’s top two videogame streaming sites, ordered it to end exclusive music copyright agreements and found WeChat illegally transferred user data.
The company is one of a handful of technology giants that dominate China’s internet space and which have historically prevented rivals’ links and services from b eing shared on their platforms.
Full coverage: REUTERS
WORLDWIDE: FINANCE/MARKETS
Global oil’s comeback year presages more strength in 2022
Global oil demand roared back in 2021 as the world began to recover from the coronavirus pandemic, and overall world consumption potentially could hit a new record in 2022 – despite efforts to bring down fossil fuel consumption to mitigate climate change.
Gasoline and diesel use surged this year as consumers resumed travel and business activity picked up. For 2022, crude consumption is expected to reach 99.53 million barrels per day (bpd), up from 96.2 million bpd this year, according to the International Energy Agency. That would be a hair short of 2019’s daily consumption of 99.55 million barrels.
That will put pressure on both OPEC and the U.S. shale industry to meet demand – after a year when major producers were surprised by the rebound in activity that overwhelmed supply and led to tight inventories worldwide. Numerous OPEC nations have struggled to add to output, while the U.S. shale industry has to deal with investor demands to hold the line on spending.
After beginning the year at $52 a barrel, Brent crude rose as high as about $86 per barrel before tailing off at the end of the year. Forecasters say prices could resume their upward path in 2022 unless supply increases by more than expected. Bank of America researchers estimate Brent will average $85 a barrel in 2022, due to low inventories and a lack of spare capacity.
Full coverage: REUTERS
Asian shares advance, dollar soft as markets decide Omicron fallout limited
A global share rally continued in early Asian trading on Thursday and the safe haven dollar was on the back foot as markets took cheer from positive signs about the impact of the omicron variant of COVID-19 and U.S. economic data.
Japan’s Nikkei (.N225) gained 0.3% and MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.6%, a third successive session of gains after taking a jolt on Monday when fears about the new strain of coronavirus gripped markets and pushed investors to safe haven assets.
“The unpredictable path of the pandemic and its related impacts on growth and inflation continue to dominate investor risk appetite,” said David Chao global market strategist Asia Pacific at Invesco.
“The recent health data from the UK and other places around the world indicate that the worst case is unlikely: even though transmission rates are reportedly higher, this variant seems less virulent and less prone to cause serious illnesses or death.”
The risk of needing to stay in hospital for patients with the Omicron variant of COVID-19 is 40% to 45% lower than for patients with the Delta variant, according to research by London’s Imperial College published on Wednesday.
Overnight the Dow Jones Industrial Average (.DJI) rose 0.74%, the S&P 500 (.SPX) gained 1.02%, and the Nasdaq Composite (.IXIC) added 1.18%, after data showed U.S. consumer confidence improved further in December, and the White House said it was resuming talks on a massive social spending and climate change bill with holdout senator Joe Manchin.
Full coverage: REUTERS
