Asian stocks fall, oil rebounds on Omicron fears

Asian markets fell again Monday, but oil rebounded strongly as investors tried to assess the threat of the new Omicron Covid strain on the global economic recovery.

Flight bans from southern Africa were put in place on Friday because of the heavily mutated variant, which some fear could be evade vaccines, which forced several governments to throw up flight bans from southern Africa, where it was discovered and introduced fresh containment measures.

The crisis added to an already jittery mood on trading floors due to the surging inflation and central banks rolling back their monetary policies to prevent prices from running out of control.

Omicron's uncertainty has prompted a rethink of the global outlook, said Rodrigo Catril, National Australia BankAustralia Bank's chief economist. More markets are likely to be jittery until we know more markets are likely to be jittery, as a new Covid wave may or may not be more infectious or deadly. Two South African health experts said symptoms of Omicron appeared to be mild, though the World Health Organization has urged caution.

Analysts warned that markets would remain on edge until more information was known about the variant.

Matt Simpson, of StoneX Financial, said that we have a highly contagious, yet mild strain. If that happens, markets could very well rally through December as original fears recede and markets focus on Fed tightening and of course Santa's rally.

Priya Misra, a TD Securities analyst, said: We need more answers to figure out the impact on growth.

All three main indexes on Wall Street ended up down more than two percent, while London, Paris and Frankfurt were also hit a 3.6 percent drop.

The losses were dwarfed by crude, which fell below $0 on its worst day since WTI went below $0 at the beginning of the epidemic, with dealers fretting about the possible impact on demand if more lockdowns are introduced.

Asian equities, which suffered hefty selling pressure, extended losses on Monday, though the selling was a lot lighter.

In the morning, Tokyo and Hong Kong flirted with positive territory but remained in the red, while Shanghai, Sydney, Seoul, Singapore, Taipei, Wellington, Manila and Jakarta retreated.

But crude gained a bounce, with WTI up more than five percent and Brent more than four percent higher -- having climbed 13.1 percent and 11.5 percent on Friday.

Reports said that OPEC and other major producers were considering whether or not to increase output each month, in light of the latest rout and the possibility of new shutdowns if Omicron becomes a major problem.

In Hong Kong, casino operators plunged after police said the head of Macau's largest junket operator admitted to running illegal betting activities.

The arrest of Alvin Chau at the weekend marks the first of such a high profile figure from the city's gaming industry and comes as Beijing begins a crackdown, with plans in September to increase government regulation of the sector.

MGM China lost more than nine percent of its value, while Galaxy Entertainment, Wynn Macau and Sands China all lost more than seven percent.

Dollar yen was up at 113.68 yen from 113.38 yen at 2100 GMT on Friday.

The euro pound was DOWN at 84.58 pence from 84.77 pence.

New York - Dow was down 2.5 percent at 34,899.