SYDNEY – Asian stocks and oil prices slipped on Tuesday as the spread of the Omicron coronavirus variant rattled investors who were already on edge ahead of a slew of central bank decisions this week, including a key Federal Reserve meeting.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.46 percent.
China’s CSI300 index was also 0.41 percent lower, after health authorities in Tianjin detected mainland the country’s first Omicron case.
Major Chinese manufacturing province Zhejiang is also fighting its first COVID-19 cluster this year, with tens of thousands of citizens in quarantine and virus-hit areas suspending business operations.
The combination of the economic risks from the Omicron variant and a potentially more hawkish tone from the Fed on Wednesday dampened risk appetite.
“We expected to see an acceleration of tapering by the Fed and, of course that bringing forward interest rate increases, so it’s going to be interesting to see how the market deals with that,” said John Milroy, an adviser at Ord Minnett in Sydney.
“I think there are reasons why you might expect to see money go back into cash for a bit, in expectation that the start of 2022 is going to be a volatile period.”
Hong Kong’s Hang Seng Index was down 1 percent, South Korea’s KOSPI was 0.4 percent lower, Japan’s Nikkei stock index was down 0.13 percent and Australian shares were 0.31 percent lower.
The Fed is on Wednesday expected to signal a faster wind-down of its $120 billion a month bond buying programme in a move to fight high inflation, which could move it one step closer to raising interest rates.
The dollar edged higher ahead of the upcoming meetings, with investors eyeing the possibility that the Fed will start to raise rates in 2022.
