Equity and oil markets slump on Omicron panic

PHOENIX, ARIZONA – DECEMBER 18: A sign asks visitors to wear a mask in downtown Phoenix where new COVID-19 cases are down but health experts warn cases may rise with the introduction of the omicron strain on December 18, 2021 in Phoenix, Arizona. According to the Arizona Department of Health Services, since mid-December 2020 over 14,000 people have died of COVID-19 in Arizona. Arizona Governor Doug Ducey has signed an executive order banning local governments from imposing the vaccine requirements. Arizona does not yet have a mask mandate and mask use is sporadic. Spencer Platt/Getty Images/AFP (Photo by SPENCER PLATT / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)


by Roland JACKSON
Agence France Presse

Global equity and oil markets slumped Monday on investor panic over the impact of worldwide measures to contain the fast-spreading Omicron coronavirus variant, dealers said.

Asia tanked on concern over a fresh global surge in coronavirus infections, sparking a fierce renewed selloff in Europe, with eyes also on the US open.

Oil tumbled by more than five percent as traders fretted over the impact on the world’s appetite for energy, which has already taken a heavy blow since the pandemic erupted early last year.

Sentiment was jarred by the future of US President Joe Biden’s massive social spending bill after it lost the crucial vote of a moderate Democrat.

The British pound fell sharply after the surprise weekend departure of Prime Minister Boris Johnson’s Brexit minister David Frost.

– Omicron ‘panic mode’ –
“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.

“Tighter restrictions across parts of Europe and fears that we could see a circuit breaker in the UK have put a chill in the air for investors.”

People wait at the entrance of the vaccination centre at the former ‘International Congress Center’ (ICC) in Berlin on December 20, 2021, amid the ongoing coronavirus Covid-19 pandemic. (Photo by Tobias SCHWARZ / AFP)

The EU’s drug regulator was set to decide Monday whether to approve 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 holiday 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 slammed the oil market — and travel stocks — on concerns about demand fallout as countries revert back to containment measures and travel curbs.

“Stocks and crude oil have sold off as the markets start the final week before Christmas with a whimper,” added ThinkMarkets analyst Fawad Razaqzada.

“Risk appetite was non-existent… as investors reacted to the worsening coronavirus situation over the weekend.

“Further measures to curb its spread were announced by some of Europe’s largest economies — most banning UK visitors, where Omicron is spreading.”

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 as the fragile economic recovery is threatened again by spiking Covid-19 cases.

The Bank of England delivered the first interest rate hike in three years, while the Federal Reserve said it would speed up the taper of its bond-buying programme and indicated three interest rate hikes before the end of 2022.

Dealers were unmoved Monday by news that China had trimmed a key interest rate by five basis points as it looks to reignite the stuttering economy.

– Key figures around 1120 GMT –
Brent North Sea crude: DOWN 3.8 percent at $68.19 per barrel

West Texas Intermediate: DOWN 3.8 percent at $68.19

London – FTSE 100: DOWN 1.2 percent at 7,186.53 points

Frankfurt – DAX: DOWN 1.9 percent at 15,230.10

Paris – CAC 40: DOWN 1.2 percent at 6,845.70

EURO STOXX 50: DOWN 1.5 percent at 4,099.71

Tokyo – Nikkei 225: DOWN 2.1 percent at 27,937.81 (close)

Hong Kong – Hang Seng Index: DOWN 1.9 percent at 22,744.86 (close)

Shanghai – Composite: DOWN 1.1 percent at 3,593.60 (close)

New York – Dow: DOWN 1.5 percent at 35,365.44 (close)

Euro/dollar: UP at $1.1262 from $1.1240 late on Friday

Pound/dollar: DOWN at $1.3182 from $1.3245

Euro/pound: UP at 85.44 pence from 84.86 pence

Dollar/yen: DOWN at 113.49 from 113.63 yen

© Agence France-Presse