Stocks, oil fall over global containment measures
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GLOBAL equity and oil markets slumped yesterday on investor panic over the impact of worldwide measures to contain the fast-spreading Omicron coronavirus variant, dealers said.
Asia tanked due to concerns over a fresh global surge in coronavirus infections, sparking a fierce renewed selloff in Europe, while Wall Street indices also closed lower.
Oil tumbled as traders fretted over how the latest COVID-19 strain might hit the world’s appetite for energy, which has already suffered a heavy blow since the pandemic erupted early last year.
In New York, the sentiment was jarred by a crucial moderate Democratic senator’s announcement that he would not support President Joe Biden’s social spending bill, imperiling the measure that some analysts view as a positive for US growth.
“It does not feel like the most wonderful time of the year for Wall Street,” Oanda’s Edward Moya said in a note.
The British pound fell sharply after the surprise weekend departure of Prime Minister Boris Johnson’s Brexit minister David Frost.
“After battling endless headwinds in recent weeks, markets have finally been knocked over as the rapid spread of Omicron finally reaches panic mode,” said AJ Bell investment director Russ Mould.
Meanwhile, the EU’s drug regulator approved a fifth Covid jab as the United States warned of a bleak winter with the Omicron variant spurring new waves of infections globally.
Since it was first reported in South Africa in November, Omicron has been identified in dozens of countries, prompting many to reimpose travel restrictions and other measures. The Netherlands imposed a Christmas lockdown, and Germany tightened restrictions notably affecting the unvaccinated, while media speculation swirls over the re-imposition of tougher UK curbs.
The rapid spread of Omicron has also slammed the oil market and travel stocks, since a return to containment measures and travel curbs would hit the aviation and tourism industries as well as dampen demand for fuel.
“There is some de-risking in the face of headline news that has market participants thinking the Omicron Grinch might steal Christmas after all,” said analyst Patrick J.O’Hare at Briefing.com.
With traders beginning to wind down ahead of the festive season, analysts said trade was thinner and markets more susceptible to swings, but the mood has become increasingly glum as central banks start paring their huge financial support to fight inflation.
World markets had briefly risen last week after other major central banks took action to combat soaring inflation.
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