Global markets rattled by omicron vaccine worries
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, October 27, 2021.
Brendan McDermid | Reuters
LONDON — Global markets have been rattled once again on concerns that the new omicron Covid-19 variant could potentially evade vaccines.
Although health authorities have said it will take several weeks to gain a full picture of how omicron’s 30+ mutations affect its response to existing vaccines, Moderna CEO Stephane Bancel told the Financial Times on Monday that he expects them to be less effective against the new strain. Bancel also told CNBC on Monday that it could take months to develop and ship a vaccine that specifically targets the omicron variant.
European stocks fell at Tuesday’s open to all but erase Monday’s gains, after the market attempted to begin a rebound following Friday’s sharp global sell-off. The pan-European Stoxx 600 index was down 1.6% by mid-morning.
Stateside, Dow futures were down more than 550 points in early premarket trade, as vaccine efficacy concerns reversed the uptick in sentiment following President Joe Biden’s assertion that economic lockdowns and further travel restrictions were currently off the table.
Spot gold prices rose more than 0.5% to more than $1,794 per troy ounce, while fellow traditional safe haven the Japanese yen also rose. The dollar was down 0.7% versus the yen on Tuesday morning at 112.7.
The yield on the benchmark 10-year Treasury note dropped by 10 basis points to 1.4273% at 4:30 a.m. ET. The yield on the 30-year Treasury bonds fell 6 basis points to 1.8166%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
In the crypto space, bitcoin fell 2.75% to slide to $56,520. Oil prices also retreated, with international benchmark Brent crude sliding 3.2% to $71.12 per barrel and U.S. crude dropping 2.8% to $67.97
The moves come after European and U.S. stocks attempted a relief rally on Monday following comments by the South African doctor who raised alarm about the new variant. Dr. Angelique Coetzee said symptoms of omicron had so far been extremely mild.
Charalambos Pissouros, head of research at JFD Bank, said the week’s moves so far evidenced how sensitive market participants are to omicron headlines.
“We believe that this will be the main theme for a while more. With that in mind, we are very reluctant to say that market concerns have diminished, and that yesterday’s rebound is the beginning of a long-lasting recovery. Any new negative headline has high chances of resulting in another leg of massive selling,” Pissouros said.
Various analysts have warned that volatility may abound in the coming weeks, but urged investors to stay the course and retain focus on the unchanged long-term fundamentals.