World equity market gauges retreated from early gains on Wednesday on concerns the discovery of the first Omicron case in the United States (US) and the expectation that the Federal Reserve (Fed) will raise interest rates earlier than next year has caused investor sentiment to decline.
Wall Street’s key economic sectors posted a positive outlook while European stocks posted their best session in nearly 6 months after a sharp sell -off on Tuesday triggered by unease over rising inflation and questions about Omicron’s new variant.
The safe -haven currencies of the Japanese Yen and Swiss Franc rose despite the more risky British and Australian currencies rebounding.
Similar investor sentiment can be seen in US stocks when initial gains of more than 1.5% were wiped out.
The MSCI worldwide index closed 0.26% lower after early trading high at 1.8%.
The STOXX 600 index closed 1.7% higher with the German DAX index gaining 2.5% and the French CAC40 adding 2.4%.
The Dow Jones Industrial average was down 1.34%, the S&P 500 was down 1.18%and the Nasdaq was down 1.83%. Only the S&P utility sector <.SPLRCU) closed higher.
Investors are still skeptical about the prospect of rising inflation and the Fed’s faster-rate plan to cut its massive bond-buying program.
According to Jack Janasiewicz, head of portfolio strategy at Natixis Investment Managers Solutions in Boston said the market thinks Jerome Powell will be more hawkish than ever and expects 3 rate hikes in 2022 with 3 more next year.
U.S. treasury yields reduced gains on safe -haven bids after the discovery of the U.S. Omicron case but remained higher as investors assessed the possibility of the Fed accelerating the tapered rate of bond purchases.
The 10 -year U.S. treasury note fell 1.7 basis points to yield 1.424%.
The dollar index, which tracks the value of the dollar against a group of 6 other currencies, rose 0.093% to 96,064.
The Euro was down 0.19% at $ 1.1314 while the Yen traded down 0.31% at $ 112,7800.
US crude futures were down 61 cents at $ 65.57 a barrel after an early trading session 4% higher while world benchmark Brent crude was down 36 cents at $ 68.87 a barrel.
US gold futures rose 0.4% at $ 1,784.20 an ounce.
