Tom Westbrook

SYDNEY – Stocks plunged Friday following Didi’s announcement that it will delist from New York. The news renewed concerns about U.S. and China tensions. Meanwhile, oil saw a six-week-long drop in Omicron prices and worries over rate increases.

It fell by 0.5%. Hong Kong dropped 1.3% due to big tech firms. MSCI’s Asia share index outside Japan dropped 0.7%.

At just 0.3%, the risk-sensitive Australian Dollar fell to below 71cs. This is close enough for a one year low.

Didi, who pushed ahead with the $4.4 billion U.S.IPO in July, ran into trouble with Chinese regulators and stated on Weibo. (NASDAQ:) It was seeking to have its listing moved to Hong Kong.

Moh Siong SIM, Bank of Singapore Analyst said “Delistings are starting to happen gives some nervousness over the uncertainty as it impacts on the wider U.S.–China picture.”

Didi shares the news just days after Grab’s debut on Nasdaq, which was based in Singapore, fell more than 20%. It is the first listing on Wall Street made by a Southeast Asian business.

The markets are more broadly lurching around this week on very little Omicron news, pushing the CBOE volatile index towards its greatest one-week increase since the February 2020 pandemic chaos. Investors bet higher rates even in the face of uncertainty like Omicron, which has also led to short-term yields rising.

For an early look at the variant’s virulence and/or resistance to vaccines, traders will have to wait at most a week. Rates will also be determined by U.S. labor data, which is due Friday.

Although Brent crude futures were higher overnight at $69.67/barrel, they fell more than 3% over the week. They are also down by more 18% from October’s three-year high.

In the absence Omicron information, some governments have tried to close borders regardless. However, other policymakers, most notably Federal Reserve are cautiously moving ahead with plans for a shift away from crisis-mode reactions.

Jerome Powell, Fed Chair, stated that central bankers will discuss an earlier pullback in bond buying during this month’s meeting. They also plan to stop labeling inflation temporary. The oil cartel OPEC continues to plan production increases.

Tobin Gorey, strategist at Commonwealth Bank of Australia (OTC), stated that while the Fed does not ignore Omicron’s threat but is choosing to not delay policies responses that would suggest a business-as-usual outlook.

He said that OPEC+ had done a similar job. “Neither have iced any of their policy changes, and both could be examples that indicate lockdowns to epidemic surges may become less likely.

Powell’s hawkish shift in the bond market has led to an increase in short term rates, but a decrease of long-term rates. This is because Powell believes that future growth and inflation will be slowed down if they are not done sooner. The U.S. yield rate curve was flattened.

Early Asia trade saw steady two-year Treasury yields for an almost 10-basis point weekly gain.

On the other side, benchmark 10-year Treasury yields have fallen nearly 6 bps, to 1.4291%, and 30-year yields are down by 7.3 bps, to 1.7545%.

Kit Juckes from Societe Generale, an analyst in London said, “It is inflation and not growth that makes the Fed accelerate tightening programs.”

He said that “For the first-time in ages the risk to the U.S. economy cycle is that they come to an end earlier than consensus forecasts anticipate”. His forecast a slowing of the U.S. Dollar’s upward momentum to a peak at the middle next year.

Riskier currencies were sold by investors on Friday. New Zealand and Australian dollar, which are more risky than the Australian ones, lost around 0.3%. Euro was stable at $1.1298, while the yen held steady at 113.08 dollars.