Stocks slumped on Friday after Chinese ride-hailing firm Didi announced it would delist from the New York Stock Exchange, reigniting concerns about US-China relations and digital regulation, while oil headed for a sixth consecutive weekly loss due to Omicron and rate hike fears.
Futures on the S&P 500 lost approximately 0.5 percent. Hong Kong's Hang Seng index fell 1.3 percent, led down by large technology companies. MSCI's index of Asia-Pacific stocks outside Japan lost 0.7%.
The risk-sensitive Australian dollar lost 0.3 percent and is now trading near a slightly under 71 cents one-year low.
Didi angered Chinese regulators by proceeding with its $4.4 billion U.S. initial public offering in July and announcing on Weibo that it was considering relocating to Hong Kong.
"Delistings starting to happen gives some jitters over the uncertainty as to how this impacts on the broader U.S.-China picture," said Bank of Singapore analyst Moh Siong Sim.
The news concerning Didi comes a day after Singapore-based ride-hailing and delivery company Grab's Nasdaq launch saw its stock fall more than 20%. The IPO is the largest by a Southeast Asian company on Wall Street.
More broadly, markets have swung this week in response to scant hard news about Omicron, propelling the CBOE volatility index toward its most significant one-week gain since February 2020's pandemic panic. Short-term yields have also increased as investors gambled on higher rates, notwithstanding Omicron's uncertainty.
Traders will have to wait at least another week for an early indication of the variant's pathogenicity or vaccine resistance. Labor data from the United States, which is due later on Friday, is also being closely watched to signal rates.
Brent crude prices finished higher overnight at $69.67 a barrel but have down more than 3% this week and are down more than 18% from their three-year high in October.
Until now, countries have hurried to close borders in the absence of Omicron details. However, some policymakers, most notably the Federal Reserve, are proceeding slowly with plans to transition away from crisis mode responses.
Fed Chairman Jerome Powell said central bankers would discuss a more rapid wind-down of bond purchases during this month's meeting and cease referring to inflation as transitory. OPEC is proceeding with planned output increases.
"The Fed is not ignoring the threat from Omicron, but are choosing not to let it delay policy responses that suggest a more business as usual outlook," Commonwealth Bank of Australia strategist Tobin Gorey said.
"OPEC+ has done a similar thing," he noted. "Neither has iced their planned policy changes...and both are perhaps examples that suggest lockdown responses to epidemic surges are becoming less likely."
The bond market's reaction to Powell's hawkish tilt has been to boost short-term rates and drive long-term rates down, on the assumption that further aggressive rate hikes will end up restricting future inflation and growth and severely flattening the U.S. yield curve.
Treasury rates on two-year notes were stable in early Asia trade, despite a weekly increase of about ten basis points.
Benchmark On the other side, 10-year Treasury yields have fallen roughly six basis points to 1.4291 percent this week, while 30-year yields have down 7.3 basis points to 1.7545 percent.
"It's inflation, not growth, which is making the Fed accelerate tightening plans," Kit Juckes, a strategist at Societe Generale in London, explained.
"For the first time in ages, the risk to this U.S. economic cycle is that it comes to an end sooner than consensus forecasts expect," he added, anticipating that the U.S. dollar's upward momentum could stall towards a mid-year peak.
On Friday, investors sold risky currencies. Australian and New Zealand dollars, riskier currencies, declined roughly 0.3 percent. The euro remained stable at $1.1298 per euro, while the yen remained robust at 113.08 per dollar.
