Stocks, euro retreat on Austria Covid lockdown

US and European stock markets fell Friday and the euro slumped as Austria announced a new strict lockdown to try to curb surging Covid cases, triggering heavy losses for oil prices.

The lockdown in Austria will begin Monday and vaccination against Covid-19 in the eurozone country will become mandatory from February, said Chancellor Alexander Schallenberg.

European stocks “turned red… as a new lockdown in Austria and the prospect of similar action in Germany wiped out earlier gains”, said Craig Erlam, senior market analyst at Oanda trading group.

Wall Street followed Europe down as the Dow Jones and the tech-heavy Nasdaq were off around a half-percent in early trading.

Fawad Razaqzada, market analyst at ThinkMarkets, warned of a “short-term correction as investors wake up to the risks facing the eurozone economy,” despite the prospect of a weaker euro boosting exports.

“It is not necessarily about Austria, but concerns that similar lockdown measures might be introduced to other parts of Europe (which) has weighed on sentiment today,” he added.

Oil prices tumbled, with the benchmark Brent North Sea oil contract falling by 2.6 percent to just under $80 per barrel.

– Alibaba sinks –

Earlier, Asian stock markets mostly closed higher, but Chinese e-commerce titan Alibaba plunged by more than 10 percent after warning of a weaker outlook following China’s crackdown on the tech sector and slowing growth in the world’s second-biggest economy.

With Alibaba a big player on Hong Kong’s Hang Seng Index, the market dropped more than one percent. Other tech firms including Tencent and XD suffered smaller losses.

Other major Asian indices ended the week higher, Tokyo up as the government announced plans to inject $490 billion into the Japanese economy to kickstart recovery from the pandemic.

Traders had been given a positive lead from Wall Street overnight, where the S&P 500 and Nasdaq indices ended at record highs.

Focus remains on surging inflation that is expected to push central banks like the Bank of England (BoE) and Federal Reserve to raise interest rates sooner than had been expected.

Data this month have shown prices rising at levels not seen for three decades in the United States, 18 years in Canada and 10 years in Britain owing to soaring energy costs and global supply chain snarls.

Finance chiefs in some countries including South Korea and New Zealand have already hiked interest rates, while the Fed has announced plans to wind down its vast cash stimulus programme.

It is now facing increasing pressure to raise borrowing costs as soon as mid-2022, while the Bank of England is forecast to tighten its main interest rate as early as next month.

On the corporate front, Irish no-frills airline Ryanair said it is to delist from the London Stock Exchange next month owing to high costs and falling trade volumes following Brexit.

The airline, whose primary listing is on the Euronext Dublin, had already hinted at the move at the start of November because of fallout from Britain’s departure from the European Union.

– Key figures around 1350 GMT –

New York – Dow: DOWN 0.5 percent at 35,679.48 points

London – FTSE 100: DOWN 0.3 percent at 7,238.14

Frankfurt – DAX: DOWN 0.4 percent at 16,156.53

Paris – CAC 40: DOWN 0.5 percent at 7,104.94

EURO STOXX 50: DOWN 0.5 percent at 4,361.39

Tokyo – Nikkei 225: UP 0.5 percent at 29,745.87 (close)

Hong Kong – Hang Seng Index: DOWN 1.1 percent at 25,049.97 (close)

Shanghai – Composite: UP 1.1 percent at 3,560.37 (close)

Euro/dollar: DOWN at $1.1312 from $1.1374 at 2145 GMT

Euro/pound: DOWN at 84.03 pence from 84.22 pence

Pound/dollar: DOWN at $1.3462 from $1.3501

Dollar/yen: DOWN at 113.89 yen from 114.24 yen

Brent North Sea crude: DOWN 2.6 percent at $79.94 per barrel

West Texas Intermediate: DOWN 1.5 percent at $77.20 per barrel

dan-bcp/cdw/lth