European markets are seen opening lower on Thursday after stocks on Wall Street reversed an early rally to end deep in the red overnight.
Asian stocks traded mixed as the Organization for Economic Cooperation and Development (OECD) downgraded its forecast of global economic growth for 2021 and warned that inflation could be higher and last longer than originally anticipated amid the disruption of global supply chains.
Chinese real estate shares advanced amid signs that Beijing is easing liquidity strains on the cash-strapped property sector.
Investors were also reacting to the Fed comments on inflation and tapering.
Federal Reserve Bank of New York President John C. Williams said that Omicron could prolong supply and demand mismatches, causing some inflation pressures to last.
Separately, Cleveland Fed President Loretta Mester said she is “very open” to scaling back the Fed’s asset purchases at a faster pace.
On the Covid-19 front, South Africa’s new Covid-19 cases nearly doubled in a day, while the U.K., Switzerland and Brazil reported cases of the Omicron variant.
The WHO said Wednesday that 23 countries across the world have reported cases of the highly mutated Omicron Covid-19 variant.
Gold edged lower on dollar strength, while oil prices were seeing modest gains on expectations that OPEC+ may pause supply additions amid Omicron fears.
It’s a quiet day ahead on the European economic calendar, with Eurozone unemployment and wholesale inflation figures likely to be in focus.
Across the Atlantic, the initial jobless claims figures will be released later today ahead of the monthly nonfarm payrolls report due Friday.
U.S. stocks reversed early gains to end sharply lower overnight as health officials confirmed the first case of the Omicron Covid-19 variant in California and Fed Chair Jerome Powell said the risks of persistent elevated inflation have “clearly risen.”
On the data front, readings on private sector employment and manufacturing painted a positive picture of the world’s largest economy.
The Dow fell 1.3 percent to hit a nearly two-month closing low, while the S&P 500 dropped 1.2 percent and the Nasdaq Composite shed 1.8 percent to reach their lowest closing levels in over a month.
European markets advanced on Wednesday despite the gloom surrounding the new Omicron variant and U.S. inflation.
The pan-European Stoxx Europe 600 index rallied 1.7 percent. The German DAX surged 2.5 percent, France’s CAC 40 index climbed 2.4 percent and the U.K.’s FTSE 100 added 1.6 percent.
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