Asia-Pacific stocks drop as investors watch omicron Covid variant; oil prices rebound more than 4%

SINGAPORE — Shares in Asia-Pacific fell in Monday morning trade as investors monitor developments surrounding the recently discovered omicron Covid variant.

In Japan, the Nikkei 225 declined 0.73% in morning trade while the Topix index shed 1.17%. South Korea’s Kospi shed 0.37%.

Shares in Australia also slipped as the S&P/ASX 200 fell 0.42%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.12% lower.

Elsewhere, U.S. stock futures moved higher following Friday’s big sell-off, as investors stateside also watched for the latest developments related to the omicron variant.

Global markets tumbled late last week as the World Health Organization (WHO) labeled the omicron Covid strain a “variant of concern.” In Asia, the Nikkei 225 in Japan and Hang Seng index in Hong Kong both fell more than 2% on Friday.

“Things definitely will be a little bit more dicey going forward,” John Vail, chief global strategist at Nikko Asset Management, told CNBC’s “Squawk Box Asia” on Monday.

“This variant, as it seems, might not be as horrible as the market thought it might be on Friday, but still it’s got to shake out some of the excess risk taking and perhaps some of the excess consumption out there in the world too as people grow a bit more cautious,” Vail said.

The WHO said in a Sunday statement that it was still unclear whether infection with the omicron Covid variant causes more severe disease as compared with other strains, including delta.

Oil prices were higher in the morning of Asia trading hours.

International benchmark Brent crude futures were up 4.19% to $75.77 per barrel. U.S. crude futures gained 4.8% to $71.42 per barrel. On Friday, oil saw its worst day of 2021 amid renewed Covid fears.

Spot gold traded at $1,790.75 per ounce, having declined from above $1,800 late last week.

The Japanese yen, widely seen as a safe-haven currency, traded at 113.75 per dollar after strengthening sharply late last week from above 114.8 against the greenback.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.192 after a recent drop from above 96.4.

The Australian dollar changed hands at $0.7136, having dropped last week from above $0.725.

Bitcoin prices were also higher, recovering after a Friday plunge. The cryptocurrency was up 5.78% and trading at $57,779.45 as of 7:32 p.m. ET Sunday, according to data from Coin Metrics.