A new strain of the virus responsible for COVID-19, B.1.1.529, has been named the “Omicron variant” by World Health Organization and classified as a “variant of concern”.
Analysts say recent market declines are the result of anxiety over the new Coronavirus variant and expectations of the US accelerating the pace of tapering. The share prices are likely to have a bumpy ride while experts evaluate whether existing vaccines will be effective against the new variant.
The increase in Omicron cases will likely result in lockdowns and affect airlines, hotels, travel portals and the multiplex sector as they are yet to recover from the losses incurred during lockdowns in both the first and second waves of Covid-19. Sectors like airlines, hotels, travel portals and multiplexes are showing a decline. Telecom and the pharmaceutical sectors have also been losing money.
Meanwhile, India’s Prime Minister Narendra Modi has requested a review of the decision to resume international flights on December 15 during the meet to take stock of the Omicron variant on Saturday. This resulted in a huge decline in airlines and related Indian stocks.
In a related development, Jerome Powell, chairman of the Federal Reserve, has said that the Omicron variant threatens the economic recovery in the United States. The possibility of Omicron prolonging the pandemic is unclear. Yet it could keep prices high, hurt job growth and exacerbate the supply chain crisis.
The recent rise in Covid-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity, as well as increased uncertainty for inflation. The senator testified the same to the Senate Committee on Banking, Housing, and Urban Affairs yesterday.
Following news of this potentially highly infectious and more immune-resistant variant, Wall Street sold off stocks and oil last Friday. But the market recovered much of its lost ground Monday after investors took a breath and felt a strong buying opportunity.
Powell noted in his prepared testimony that the economy suffered a body blow in the summer when the Delta variant spread worldwide. Many Americans were afraid to travel, shop, eat at restaurants or return to the office. The caregiver shortage and supply chain crisis have hindered the US economy by keeping them at home.
As infections rose and fell, the economy fluctuated, and Omicron threatens to undo much of the economic goodwill that America has built during the autumn months. Despite concerns over the newest Coronavirus variant, Asian shares were mixed Wednesday.
Having discovered the omicron variant in Japan, as well as Brazil, on Tuesday, there are concerns that further measures to prevent the infection could stymie tourism and other economic activities. Trading at ActivTrades, Anderson Alves said Asian markets were nervous because of Wall Street’s overnight slide and comments from the CEO of Moderna that COVID 19 vaccines may be less effective with Omicron than earlier variants.
“Traders will be looking for new insights into the new variant and its impact on the current vaccine framework,” Alves said. The Federal Reserve’s head said it might consider cutting off its support sooner than expected, causing Wall Street losses to deepen.
