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Omicron Spreads, Jobs Report, Didi Delisting - What's Moving Markets

EconomyDec 03, 2021 20:08
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© Reuters.

By Geoffrey Smith 

Investing.com -- More details emerged about the Omicron variant of Covid-19 in South Africa, and they're not encouraging. Stocks are set to open lower accordingly. The U.S. labor market report is likely to show another strong rise in employment last month. Didi Global confirmed it plans to delist from New York, potentially starting a broader exodus of Chinese-based companies. Grab ADRs steady after a dismal market debut. And oil rebounds sharply as OPEC and Russia keep their finger hovering over the 'pause' button with regard to future output hikes. Here's what you need to know in financial markets on Friday, 3rd December.

1 Omicron spreads to hit the young

Fears that the Omicron variant of Covid-19 will prove to be more infectious than previous ones began to gather substance, with data from South Africa, where Omicron was first identified, pointing to a potentially ominous new development.

The rate for new infections and hospitalizations across the country is rising faster than in previous waves of the pandemic. The seven-day average for new infections has risen from under 600 two weeks ago to over 5,000 as of Thursday.  

"Preliminary data suggests Omicron is more transmissible and has some immune evasion," said Michelle Groome, head of South Africa’s National Institute for Communicable Diseases.

In addition, NICD public health expert Wassila Jassat was quoted as saying that the latest wave has hit all age groups, particularly children under five years old. If that pattern holds, it will represent a significant change from previous waves of Covid-19, which have hit older people disproportionately.

2. Jobs report to show continued labor market strength

It predates the discovery of the Omicron variant, but the U.S. jobs report at 8:30 AM ET (1330 GMT) will still send a pretty strong signal about the health of the U.S. labor market.

Analysts expect the U.S. economy to have added 550,000 new nonfarm jobs in the month through mid-November, up from 531,000 the previous month. Both the ADP survey and the last two weeks’ jobless claims numbers have turned out stronger-than-expected, suggesting that the potential for a surprise is – if anything – skewed to the upside.

Also of note at 10 AM ET will be the Institute for Supply Management’s non-manufacturing purchasing managers index, which is expected to cool only slightly from its record high last month. Factory goods orders and durable goods orders (excluding defense) are also due.

3. Stocks set to open lower;  

U.S. stocks are set to open lower ahead of the labor market release, as the news from South Africa weighed on sentiment ahead of the labor market release. 

By 6:15 AM ET, Dow Jones futures were down 93 points, or 0.2%. while S&P 500 futures and Nasdaq 100 futures were both down 0.3%. All three indices had made major gains on Thursday to close only just below where they ended last week.

Suggestions that a new wave of Covid-19 could stop the Federal Reserve’s plans to tighten monetary policy were countered by both governor Randall Quarles and Cleveland Fed President Loretta Mester over the last 24 hours, the latter telling the Financial Times that a more transmissible disease could deter people from re-entering the labor force, putting further upward pressure on wages.

Stocks likely to be in focus later include DocuSign (NASDAQ:DOCU), which plunged in premarket after issuing disappointing guidance. Ulta Beauty (NASDAQ:ULTA), which reported stronger results, is heading sharply the other way in premarket.

4. Didi confirms delisting; Grab steadies after debut debacle

ADRs in ride-hailing giant Didi Global soared after the company confirmed it plans to delist from the New York Stock Exchange, the first immediate consequence of the Securities and Exchanges Commission’s publication of new rules ensuring that U.S.-listed companies can be thoroughly audited.

Didi didn’t give any details about the terms on which investors – who are sitting on heavy losses after its ill-fated listing earlier this year – would be cashed out. The company’s primary listing is set to move to either mainland China or Hong Kong, significantly narrowing the pool of capital available to it.

Elsewhere, Grab – the Southeast Asian ‘super-app’ company whose profile is a rough proxy for some of the Chinese companies that may soon delist from the U.S. – recouped some of its losses in premarket after falling by over 20% on its post-SPAC merger debut.    

5. Oil recovers after nuanced OPEC+ signals

Crude oil prices rose sharply, a day after OPEC and its allies said they would reserve the right to scrap a planned output increase in January at any time.

The bloc’s move was an effort to weigh the obvious strength of current oil demand against the risk of a possible setback from new mobility restrictions as the Omicron variant spreads around the world. Consultants FGE estimate that Germany’s new restrictions alone could hit demand for refined products by 200,000 barrels a day. 

By 6:15 AM ET, U.S. crude futures were up 2.3% at $68.05 a barrel, while Brent crude was up 2.4% at $71.39 a barrel. Baker Hughes' rig count and CFTC positioning data are due later.

Elsewhere in commodities, wheat prices continued their advance after heavy rains threatened the harvest in the Australia, adding to drought-related shortages suffered earlier in the year by the U.S. and Russia.

Omicron Spreads, Jobs Report, Didi Delisting - What's Moving Markets
 

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