Global markets down, oil slumps on Omicron vaccine warning

Global markets down, oil slumps on Omicron vaccine warning
3 min read
30 November, 2021
Frankfurt, London and Paris followed Asia in closing sharply lower, with sentiment dogged by fears of fresh economic fallout from the long-running Covid crisis.
The tumble followed the Moderna remarks, which have reignited fears over how the Omicron variant spread could hit energy demand [Getty]

World stocks and oil prices slid Tuesday after Moderna warned current vaccines might be less effective at fending off the Omicron variant, and eurozone inflation spiked to a record high.

Frankfurt, London and Paris followed Asia in closing sharply lower, with sentiment dogged by fears of fresh economic fallout from the long-running Covid crisis.

Oil slumped back in New York with WTI down 5.1 percent a barrel at $66.38 -- a three-month low -- while Brent crude was off 3.80 percent at $70.65.

The tumble followed the Moderna remarks, which have reignited fears over how the Omicron variant spread could hit energy demand.

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Analysts meanwhile reacted with concern after Federal Reserve Chair Jerome Powell said the threat of "persistently high inflation" had risen, meaning the US central bank would consider removing stimulus more quickly.

"Reading between the lines, it appears that Chairman Powell has grown dramatically more concerned with the risk of sustained inflation, and is therefore looking to end the central bank's asset purchases sooner than initially outlined," said Matt Weller, global head of research at StoneX.

"Powell's comments have already sent a tempest through major markets," Weller noted with the US central bank's preferred price gauge seeing a surge of five percent for the 12 months ending in October, well above its two percent goal.

On Wall Street, the Dow had drifted down 1.9 percent two hours into the session with the tech-heavy Nasdaq losing 2.0 percent.

The European markets selloff had earlier accelerated as data showed eurozone inflation rocketed on runaway energy prices to a record 4.9 percent.

'Markets hate uncertainty'

"It only took one comment from the boss of drugs firm Moderna to derail markets once again," noted AJ Bell investment director Russ Mould.

"Markets hate uncertainty, and this is precisely what we have now. No one knows how much trouble the new variant is going to cause."

Moderna chief executive Stephane Bancel's comments, in an interview with the Financial Times, sent traders running for cover.

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"There is no world, I think, where (the effectiveness) is the same level ... we had with Delta," Bancel told the newspaper.

The high amount of mutations on Omicron and its swift spread in South Africa indicated the present jabs would need to be tweaked, he said.

'Inflation drumbeat continues' 

"The inflation drumbeat continues to sound, providing another reason to worry for beleaguered investors," said IG analyst Chris Beauchamp."

In Britain, meanwhile, traders are reassessing hopes of a pre-Christmas interest rate hike.

Prior to Omicron, the Bank of England had been forecast to lift rates to dampen near decade-high British inflation.

Key figures around 1700 GMT

 

New York - Dow: DOWN 1.7 percent at 34,476.28 points

London - FTSE 100: DOWN 0.7 percent at 7,059.45 (close)

Frankfurt - DAX: DOWN 1.2 percent at 15,100.13 (close)

Paris - CAC 40: DOWN 0.8 percent at 6,721.16 (close)

EURO STOXX 50: DOWN 1.1 percent at 4,063.05

Tokyo - Nikkei 225: DOWN 1.6 percent at 27,821.76 (close)

Hong Kong - Hang Seng Index: DOWN 1.6 percent at 23,475.26 (close)

Shanghai - Composite: FLAT at 3,563.89 (close)

West Texas Intermediate: DOWN 5.1 percent to $66.38

Brent North Sea crude: DOWN 3.8 percent at $70.65

Euro/dollar: DOWN at $1.1285 from $1.1291 at 2200 GMT on Monday

Dollar/yen: DOWN at 112.82 yen from 113.53 yen

Pound/dollar: UP at $1.3249 from $1.3315

Euro/pound: UP at 85.24 pence from 84.80 pence