Asia shares slip as investors weigh omicron economic risks

TOKYO (AP) — Asian shares mostly slipped Tuesday as investors cautiously weighed how much damage the new omicron coronavirus variant may unleash on the global economy.

South Korea’s Kospi led regional losses with a 2.4% drop, to 2,839.01.

Japan's benchmark Nikkei 225 lost earlier gains and dropped 1.6% to 27,821.76, as pessimism over the omicron variant set in. Australia's S&P/ASX 200 gained 0.2% to 7,256.00. Hong Kong's Hang Seng dipped 1.7% to 23, 439.91, while the Shanghai Composite was nearly flat at 3,563.89.

The yield on the 10-year Treasury slipped back to 1.46% from 1.51% late Monday. It tends to rise and fall with expectations for the U.S. economy’s strength and for inflation.

Some analysts think a serious economic downturn, like what happened last year, likely will be averted because many people have been vaccinated. But they also think a return to pre-pandemic levels of economic activity, especially in tourism, has been dramatically delayed.

“Sentiments may ride on the positive handover from Wall Street overnight, but with the slower vaccination rate and more limited healthcare capacity in the region, uncertainty from the new omicron variant may seem to bring about higher economic risks for the region at a time where it is shifting towards further reopening,” Yeap Jun Rong, market strategist at IG in Singapore, said of the omicron's impact on Asia.

The vaccination rollout rate varies by country in the region, at about 77% in Japan, 50% in Vietnam and 35% in Indonesia. In Asia, the omicron variant has only been detected in Australia and Hong Kong, but the region is bracing for its wider arrival. It is unclear how effective current vaccines may be against the new variant.

On Wall Street, the S&P 500 rose 1.3% to 4,655.27, recovering more than half of...