Omicron cases, inflation, interest rates and oil prices

SINGAPORE — Futures pointed to a lower open Tuesday in the Asia-Pacific as investors remain concerned about inflation as well as likely policy tightening from central banks such as the U.S. Federal Reserve.

Japanese markets are set to reopen after being closed for a public holiday on Monday. Nikkei futures pointed to opening losses for the benchmark index.

In Australia, shares declined as the ASX 200 fell 0.28%. The heavily weighted financials subindex was down 0.74% as the country’s major banking names sold off. Commonwealth Bank of Australia shares were down 1.08% and ANZ declined 0.78%.

Tuesday’s session in Asia followed overnight declines in the U.S. where the Dow Jones Industrial Average and S&P 500 fell. But, the Nasdaq finished fractionally higher in regular trading.

Rising bond yields pressured stocks in the previous week. The yield on the benchmark 10-year Treasury note ticked down 1.76% Monday afternoon stateside after breaching 1.8% earlier in the day. By comparison, the yield on the 10-year note ended 2021 at 1.51%.

The U.S. dollar last traded at 95.991 against a basket of its peers, withdrawing from an earlier level above 96.00.

Elsewhere, the Japanese yen changed hands at 115.25 per dollar, strengthening from previous levels near 115.80. The Australian dollar rose 0.17% to $0.7180.

Oil prices rose during Asian trading hours, with U.S. crude adding 0.41% to $78.55 a barrel. Prices fell in the previous session on the back of demand worries amid a rise in global Covid cases.

“Investors are closely watching China’s Omicron spread, as policy could trigger more travel restrictions,” ANZ Research analysts said in a morning note.

“But the market could still benefit from tighter supplies and supply risk from Russia. OPEC’s production for December continued to be lower than committed, production increased by 70,000b/d in December,” they added.