We may be running out of 2021 runway, but there’s still plenty going on. Today, we’re looking at reports of the Omicron covid variant and what it means to the markets. After that, we’ll go over the top fundamental events to watch out for this week.
What is Omicron?
Omicron is the name of the latest variant of the covid-19 coronavirus, SARS-CoV-2. It was first reported to the World Health Organization (WHO) in South Africa last Wednesday.
Early evidence suggests that this variant carries a higher re-infection risk than previous variants we’ve seen. However, it is resistant to the vaccine. A number of countries around the world are introducing travel bans and restrictions on southern African countries in order to combat and contain the outbreak of this new strain.
However, a South African doctor who was one of the first to suspect a different coronavirus strain among patients said on Sunday that symptoms of the Omicron variant were so far mild and could be treated at home.
How are the markets taking it?
Not great. Stock markets across the world fell sharply after the discovery of Omicron as it raises fears over the economic recovery that many nations are currently going through.
The FTSE 100 index of leading UK shares closed 3.7% down on Friday evening.
FTSE, Source: Google
The Dow fell 2.5%, while US crude oil prices tumbled 13%.
Of course, no one will be more harder hit by this than the airlines and travel firms, whose shares dropped sharply over the re-imposing of travel bans, with many investors feeling that this could be the start of another “wave”.
BA owner IAG and Wizz Air dropped 15%. Tui also saw 10% of its share valuation wiped out.
Wizz Air Holdings, Source: Google
The UK temporarily banned flights from South Africa, Namibia, Zimbabwe, Botswana, Lesotho and Eswatini. All six counties are now on the UK’s travel red list.
Shares in a number of major UK banks, such as HSBC, Lloyds Bank, NatWest and Barclays all fell about 7% as investors scaled back expectations of a Bank of England interest rate rise in December.
But it wasn’t all bad news for some investors…
Food delivery firm Ocado’s shares rose 4.5% on the news, in anticipation that online firms could again be in heavy demand over the coming months, should tighter restrictions be reintroduced.
It’s clear that investors have taken a punt on what they feel they’ve seen before. This may yet turn out to be a poor, knee-jerk reaction. Let’s hope so, anyway!
What do you make of the latest news? Is Omicron a flash in the pan? Is it time we all got on and lived with virus strains? Tweet us your thoughts @_Contentworks!
Top trading events this week
There’s a fair bit going on this week, here’s when and where you need to tune in.
● EUR — Inflation Rate YoY Prel (NOV)
● USD — Fed Chair Powell Speech
● CNY — NBS Manufacturing PMI (NOV)
● EUR — Core Inflation Rate YoY Flash (NOV)
● CAD — GDP Growth Rate Annualized (Q3)
● USD — CB Consumer Confidence (NOV)
● AUD — GDP Growth Rate YoY (Q3)
● USD — Markit Manufacturing PMI Final (NOV)
No major events are scheduled.
● CAD — Employment Change (OCT); Unemployment Rate (OCT)
● USD — Non Farm Payrolls (OCT); Unemployment Rate (OCT)
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The Contentworks team