Global Stocks Tumble Ahead Of Central Bank Decisions

European and US stocks slid on Tuesday as investors showed caution ahead of key central bank decisions this week.

After surging last week, world oil prices retreated on fears over the effect the surge in new coronavirus infections will have on demand.

Central bank policymakers are battling soaring inflation that has been fueled in part by runaway energy costs.

At the same time, however, many investors fear that the Omicron variant could throw the global recovery into jeopardy.

"Investors should expect stock markets to be volatile in remaining days of the week as central banks of massive economies like the United States, Europe, and England are expected to communicate their monetary policies," said AvaTrade analyst Naeem Aslam.

The US Federal Reserve is scheduled to announce its latest policy decision on Wednesday, and could deliver a strong signal for rate hikes in 2022.

That will be followed by the European Central Bank (ECB) and the Bank of England on Thursday.

"The question this week is whether central banks perceive inflation or Omicron to be the greater risk," said analyst Crag Erlam at currency trading platform Oanda.

"Omicron has clearly added a huge cloud of uncertainty over the outlook for the economy in the coming months just as many countries were preparing for tighter monetary policy," he added.

With the consensus view still apparently that inflation pressures will ease, Erlam said he expects policymakers will warn of impending action rather than tightening borrowing conditions this week.

But data showing US wholesale prices rose by 9.6 percent in November from a year earlier reinforced expectations by some that rate hikes will come sooner than expected.

"Another hot US (wholesale prices) report is raising concern that the line of least resistance in 2022 is likely to be one of a much more aggressive monetary tightening on the part of the Federal Reserve," said analyst Michael Hewson at CMC Markets.

After a down day in Europe, Wall Street stocks retreated, with tech shares especially weak. The Nasdaq lost 1.1 percent.

Elsewhere Tuesday, Asian shares fell as investors eyed the Omicron coronavirus variant and woes in the Chinese property market.

After last week's strong performance, stocks have stumbled this week as Britain became the latest country to boost its response to the Omicron strain and China reported its first case -- which many fear could throw the global recovery into jeopardy.

Tracking those fears, Tokyo declined, as did Seoul and Sydney.

Hong Kong and Shanghai both closed with losses, dragged down by continued woes in the Chinese housing market sparked by the spectacular fall from grace of property giant Evergrande.

The Omicron coronavirus variant is spreading around the world, fuelling worries about the global economic recovery AFP / Jack TAYLOR

Developer Shimao became the latest firm to be pulled into the dragnet Tuesday as its share price plunged to its lowest level in a decade.

And Monday's decision by Chinese start-up SenseTime to postpone a $767 million initial public offering in Hong Kong also spooked markets, highlighting the risks investors face from competing sanctions as relations between Washington and Beijing sour.

Coronavirus fears have continued to plague investors, with the Asian Development Bank (ADB) warning that the Omicron variant could have a "substantial" economic impact as it trimmed its 2021 and 2022 growth forecasts for developing Asia.

New York - Dow: DOWN 0.3 percent at 35,544.18 (close)

New York - S&P 500: DOWN 0.7 percent at 4,634.09 (close)

New York - Nasdaq: DOWN 1.1 percent at 15,237.64 (close)

London - FTSE 100: DOWN 0.2 percent at 7,218.64 (close)

Frankfurt - DAX: DOWN 1.1 percent at 15,453.56 (close)

Paris - CAC 40: DOWN 0.7 at 6,895.31 (close)

EURO STOXX 50: DOWN 0.9 percent at 4,144.51 (close)

Tokyo - Nikkei 225: DOWN 0.7 percent at 28,432.64 (close)

Hong Kong - Hang Seng Index: DOWN 1.3 percent at 23,635.95 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,661.53 (close)

Euro/dollar: DOWN at $1.1261 from $1.1283 Monday

Pound/dollar: UP at $1.3228 from $1.3217