Geoffrey Smith 

Investing.com — The Omicron-variant Covid-19 is causing global markets to be shaken, and Europe has imposed its first complete lockdown within a year. Joe Biden’s most important spending bill has been criticized by a Senator who refused to endorse it. A combination of these factors will cause stocks to open sharply lower. China informs the world that it is still tightening its monetary policy, despite everyone else’s (except Turkey) increasing it. Oil tumbles due to risk-off sentiment. These are the top financial market news stories for Monday, December 20th.

1. Omicron rattles are available on the global markets

The spread of Covid-19 Omicron, a variant of Covid-19, has caused panic on world markets. Several European countries have taken restrictive steps to stop it spreading.

It fell by 1.5%, while European stock market fell to 4.9%. Copenhagen was affected by a 10% fall in Novo Norisk (NYSE) stock because of problems with its anti-obesity medicine. While the euro climbed against the dollar, Eurozone peripheral bond spreads increased.

The Netherlands put an end to all shops that were not essential during the weekend.^ThThe U.K. suggested that it might introduce stricter measures next week. Following similar French measures last week, Germany effectively banned U.K. visitors. 

A slightly more positive development is that scientists from the U.K. have added evidence to show that Omicron’s mutations, which make it transmissible, may actually reduce its ability damage the lungs. This makes Omicron less deadly than other variants.

2. Manchin derails BBB

U.S. President Joe Biden’s $2 trillion Build Back Better bill is in jeopardy after West Virginia Senator Joe Manchin said he wouldn’t support the bill in its current form. That means that the bill can’t pass without Republican support in the Senate, which seems all but ruled out.

The bill’s failure to be passed could cement the perception that the Democratic caucus on Capital Hill is too divided to govern effectively. This will negatively impact their chances of winning the next mid-term elections. By the same token, Opposition from Manchin – one of the most conservative of Democratic lawmakers – reflects on-the-ground suspicion of the party’s tax-and-spend agenda.

Goldman Sachs’ (NYSE:) analysts lowered their U.S. growth projections next year due to this news. The firm said that it caused a substantial fiscal stimulus boost.

3. U.S. stocks set to open lower after Covid infection reaches a three-month high

The Omicron news and Manchin news will cause U.S. stock prices to open sharply lower in the coming week.

At 6:20 AM ET (1220 GMT), they were down 410 point, or 1.2%. They were also down 1.3%, and down 1.5%. The cyclical-heavy Dow was the worst performer of all three indexes, falling 1.2% and 1.3% respectively.

Omicron may have been exacerbating seasonal spreads that already began, and the average 7-day Covid-19 new infection count reached its highest point in three months on Saturday. That’s starting to show up in various data points such as restaurant reservations.

These stocks are likely to be the focus Moderna (NASDAQ:) The company said that trial data showed that a booster shot with its Covid-19 vaccine dramatically increases its effectiveness against Omicron. It also mentions Zegna fashion, an Italian fashion brand, who makes its debut on NYSE.

4. China’s central bank sends a signal

China’s central bank cut its key interest rate by a token amount, in an effort to reassure local markets that it’s not going to get sucked into a global race to tighten monetary policy.

The People’s Bank of China cut its prime rate by 5 basis points to 3.80%, the first time it has cut in nearly two years. However, such a small cut – to an instrument which is one of many that it uses to fine-tune monetary policy – is unlikely to have a material impact in its own right.

This move is still welcomed by the real estate industry, whose financing conditions have become more difficult in recent weeks. Capital markets are effectively shutting down new debt from any developers other than those who have been trusted. Kaisa is one of the many defaulting developers. Houlihan Seeley was previously appointed to assist it with a restructuring.

5, Oil tumbles despite Libya shutdown, CFTC data

tumbled as Europe’s move to clamp down on mobility sparked fears of wider measures to kill demand from other countries. The chief risk in this regard comes from China’s zero-tolerance policy of Covid-19 and its readiness to swiftly impose lockdowns in response to even small and localized outbreaks.

U.S. crude oil futures fell 3.5% to $68.36 per barrel at 6:35 am ET. This was after they had fallen two weeks earlier. U.S. crude futures declined 2.8% to $71.43/barrel.

That was all despite news that Libya’s largest oil field has shut down, taking 284,000 barrels a day of output offline, barely a week before national elections due in the country. CFTC data Friday also showed that speculative investors’ selling pace had slowed significantly last week.