Stockmarkets suffer pandemic relapse
Global stockmarkets fell at the start of this week as investors grew increasingly fearful about the impact of the Omicron variant. Stocks had sold off at the end of November after news of the new variant broke, but then recovered this month on hopes that it would prove milder than previous strains.
Yet with UK infections hitting new records, borders closing and the Netherlands re-entering lockdown, traders dusted off the pandemic playbook, selling airlines and leisure stocks.
The FTSE 100 tumbled by 2.1% in early morning trading on Monday, before paring losses to close down 1%. Germany’s Dax plunged almost 3% before ending the day down 1.9%. Japan’s Topix closed more than 2% down. In America, traders are also digesting political news that could spell the end of Joe Biden’s spending plans (see page 10). The S&P 500 lost 3% over the three trading sessions to Monday’s close, its worst three-day performance since September’s sell-off.
“The market is very jittery” because of Omicron headlines, Charles Diebel of investment manager Mediolanum tells Bloomberg. “But I’m not sure the impact will last too long. I think the combination of infections and boosters means this abates relatively quickly, [that is] by February.”
Brent crude fell back below $70 a barrel for the first time in nearly three weeks. Pre-pandemic, global oil demand was roughly 100 million barrels per day (mbpd). Demand is still two mbpd below that figure, say Caitlin Ostroff and Alexander Osipovich in The Wall Street Journal. The latest wave is likely to put a lid on demand for aviation fuel. December usually brings a feel good “Santa rally” to markets. Not this year. With central banks in tightening mode, equities are being left to face Omicron without their usual monetary comfort blanket.