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Japan confirmed its first case of the Omicron variant of coronavirus on Tuesday, a day after closing its borders to all foreigners in one of the world's toughest precautionary measures.

But the case could show Prime Minister Fumio Kishida was right in making the swift closure decision, helping to avert the sort of criticism that spurred the resignation in September of predecessor Yoshihide Suga over his handling of the virus.

Chief Cabinet Secretary Hirokazu Matsuno said the discovery of the sufferer, a diplomat from Namibia in his thirties who arrived at the Japanese capital's airport of Narita, showed that border controls had worked.

"In order to avoid the worst-case situation with Omicron, we'll stay on top of the infection situation in each nation and respond flexibly and fast," he added.

Kishida had pledged to bolster Japan's response to the pandemic when he campaigned to replace Suga, whose handling of the crisis left many dissatisfied.

Border curbs were loosened slightly just weeks ago, and Kishida said he would take responsibility for all criticism of his decision to shut the country again in a move that analysts said aimed to send a strong message.

"He's saying that he's a leader who's strong in a crisis, that he can make such a decisive move," said Airo Hino, a professor of political science at Waseda University.

"The governments before him didn't restrict travel soon enough, and he's taking that into account. It's a truism of politics that how you deal with crisis can make or break a government," he added, citing a rise in support for U.S. President George W. Bush after the 9/11 attacks.

The measures, which will run at least a month from taking effect on Tuesday, were generally welcomed by the public and tolerated by business leaders.

"It's better this way for elderly citizens," said Tokiko Amemiya, an 80-year-old retiree, while one commenter on Twitter simply said, "Thanks".

Kengo Sakurada, head of the Japan Association of Corporate Executives, has called the border measures "regrettable" but said they could not be helped.

TOURISM FALL

Tourism has been a pillar of Japan's economy in recent years, but despite a fall to nearly zero in the number of inbound visitors since the pandemic began last year, the economy has limped along without them.

However, over the longer term the export-dependent economy could suffer if the new variant worsens overseas demand and snarls supply lines for Japanese companies, said Kazuma Kishikawa, an economist at Daiwa Institute of Research.

"Moreover, as seen earlier in carmakers' output cuts due to the COVID-19 spread in Asian parts factories, it could disrupt supply chains," he added.

Border controls should ease as Japan's pandemic situation subsides, business lobbies have said, adding that the curbs are out of step with global standards and keep out critical employees.

New cases in Tokyo have recently fallen into the single digits.

"The Japanese government is under pressure, but we believe the current safety protocols should be more than sufficient in continuing to keep the population safe," said Michael Mroczek, chairman of the European Business Council in Japan.

The Namibian diplomat confirmed to have the Omicron variant had been vaccinated against the coronavirus, though the type of vaccine wasn't yet known, Health Minister Shigeyuki Goto told reporters. All other people on the man's flight will be treated as close contacts and tested every two days, Goto said.

It remains to be seen whether Kishida's gamble will pay off, said Waseda's Hino, adding that the sudden decision could cause problems for sectors of the economy that depend on foreign trainees.

A crucial election to Parliament's upper house comes up next summer.

"I think chances are good it will help him out, though it may not appear in opinion polls right away," Hino said.(Reuters)

Philippines leader Rodrigo Duterte's preferred successor, Senator Christopher "Bong" Go, announced on Tuesday he was dropping out of the presidential race, leaving the administration without a candidate in next year's polls.

Go, Duterte's long-time aide, had recently hinted he may pull out of the presidential contest and said the president respected his decision.

His withdrawal raises questions over who the popular Duterte will now support in the May 2022 election. The 76-year old leader is not eligible to seek re-election, but will be standing for a senator's seat.

"I and President Duterte are ready to support whoever will truly serve and can continue and protect Duterte's legacy towards a more comfortable and safe and prosperous life for our children," Go said in a speech streamed on Facebook.

Analysts have said Duterte wants to ensure an ally succeeds him so he can be insulated from potential legal action at home or by the International Criminal Court, which has launched a probe into the thousands of killings in his "war on drugs".

Duterte's daughter, Davao Mayor Sara Duterte-Carpio, is running for the largely ceremonial deputy post alongside the son of late Philippine dictator and namesake, Ferdinand Marcos Jr., who has emerged as an early frontrunner.

Political observers say Go's withdrawal from the race would likely benefit the Marcos/Duterte-Carpio ticket as it would consolidate the Dutertes' voter base behind the 43-year-old mayor and that support could extend to Marcos.

"There is no more confusion in terms of administration support," said Aries Arugay, visiting fellow at the ISEAS Yusof-Ishak Institute and political science professor at the University of the Philippines.

Marcos is up against other presidential aspirants, including former boxing champion Manny Pacquiao, vice president Leni Robredo, Manila mayor Francisco Domagoso, and senator Panfilo Lacson. He is facing several disqualification cases grounded on a nearly three-decade old conviction for tax evasion.(Reuters)

There was a fall in world share markets and scramble to safer currencies and bonds on Tuesday after the CEO of drugmaker Moderna (MRNA.O) warned that COVID-19 vaccines are unlikely to be as effective against the new Omicron variant.

Europe's main bourses jolted 1.4% lower early on, oil shed 3%, Australia's currency which is highly sensitive to global economic confidence hit a year low while Japan's safe-haven yen, German government bonds and gold all rose. /FRX

"There is no world, I think, where (the effectiveness) is the same level," Moderna's chief Stéphane Bancel told the Financial Times in an interview.

"I think it's going to be a material drop. I just don't know how much because we need to wait for the data. But all the scientists I've talked to . . . are like 'this is not going to be good'," Bancel said. 

The early tumbles meant Europe's equity markets scratched off Monday's rebound and were below the levels hit on Friday when traders wiped roughly $2 trillion off global stocks in the initial Omicron rout.

Bancel had earlier said on CNBC that there should be more clarity on the efficacy of COVID-19 vaccines against Omicron in about two weeks, but that it could take months to begin shipping a reworked vaccine designed for the new variant.

"It's not good news, and it's coming from someone who should know," said Commonwealth Bank of Australia currency strategist Joe Capurso. "Markets have reacted in exactly the way you'd expect them to"

MSCI's broadest global equities index which tracks 50 countries (.MIWD00000PUS) was 0.2% lower and heading for only its third red month of the year. It has risen nearly 14% in 2021 whereas emerging market stocks (.MSCIEF) have lost nearly 6%.

Risk aversion also hit the currency markets with the U.S. dollar weakening 0.3% versus its main rivals. The Aussie dollar's slide of 0.65% left it at its 12-month low of $0.7093 whereas the Japanese yen - traditionally viewed as safe harbour due to its role as a funding currency - was nearing its highest level of the month at 112.95 yen. /FRX

ECONOMIC HIT

There was plenty of data to digest too.

Activity in China's services sector grew at a slightly slower pace in November, official data showed on Tuesday, as the sector took a hit from fresh lockdown measures as authorities raced to contain the latest outbreak.

China's blue chip CSI 300 index (.CSI300) closed 0.4% lower while Hong Kong's Hang Seng Index (.HSI) shed over 1.5% exacerbated by breach of a strong technical support level of 24,000 points, according to analysts.

In the commodity markets, Brent crude futures fell $2.32, or 3.2%, to $71.12 a barrel after slipping to the lowest level since Sept. 1.

A bounce in the euro continued though as strong consumer spending boosted Italian GDP data, a day after Germany's inflation rate hit its highest in decades at 6% year-on-year. 

Euro zone-wide figures are due shortly. The single currency was last at $1.1350 well up from a near 17-month trough of $1.11864 last week when ECB policymakers signalled they still expected inflation to cool.

Omicron worries though meant the yield on 10-year German Bunds -- regarded as one of the safest assets in the world -- dipped to its lowest in just over a week at -0.345% and was last down about 2 basis points on the day.

Most other benchmark 10-year yields in the euro zone fell by a similar amount, while U.S. 10-year Treasury yields tumbled 7.5 bps to around 1.45%.

"We maintain our view that the ECB’s Governing Council will reinforce its patience on the policy rate at the December meeting to look through the inflation surge," analysts at Goldman Sachs said in a note.

"Additional targeted and regional restrictions, rather than blanket lockdowns," will see "a cumulative economic hit over Q4 and Q1 of about 0.4% of GDP in the euro area, and 0.2% of GDP in the UK," they added. Blanket lockdowns though could cause twice as much damage.(Reuters)

New Zealand's main opposition National Party selected on Tuesday a former chief executive of the national carrier as its new leader to face Labour Prime Minister Jacinda Ardern in the next election expected in 2023.

Christopher Luxon, who helmed Air New Zealand for seven years until September 2019, was elevated to the top job just a year after entering parliament following a leadership crisis at the National Party that has seen four leaders replaced in as many years.

He comes in after Judith Collins, who headed the National's campaign in its worst election defeat in 2020, was dumped last week. 

"Today we are drawing a line under the events of the last four years, and we are putting them behind us," Luxon said in his speech after he was appointed leader.

Luxon's elevation will put pressure on Ardern, whose popularity has taken a hit in recent weeks due to a perceived failure in quickly vaccinating the population and growing anger over her government's tough pandemic curbs and border closures.

Ardern has enjoyed enormous personal support but a recent 1News Colmar Brunton poll showed her rating as preferred prime minister had fallen 5 points from September to 39%.

National has been in turmoil since losing power to Ardern in 2017, besieged by infighting, leadership changes and scandals.

Luxon, 51, held senior roles at global consumer goods firm Unilever before moving to Air New Zealand and leading the airline between 2012 and 2019, during which time it produced consistent profits.

He was elected to Parliament for the Botany electorate only in the 2020 election.

"I have built a career out of reversing the fortunes of under-performing companies and I’ll bring that real-world experience to this role," he said.

A protege of former Prime Minister John Key, Luxon defended his Christian faith in his maiden press conference saying his faith had been "misrepresented and portrayed very negatively".

"I want to be very clear, we have separation between politics and faith,” he told reporters.

Luxon has said he does not support euthanasia in a referendum or abortion reform.(Reuters)