Global stocks and oil prices fell again Tuesday after a brief respite from the heavy sell-off triggered by the emergence of the Omicron coronavirus variant.
Stocks in Asia Pacific and Europe slid, while Wall Street opened weaker. Oil prices fell about 3% as more countries reported cases of the variant and imposed new travel restrictions. The mood was also dampened by a warning from Moderna CEO Stéphane Bancel that current vaccines will struggle with Omicron.
“There is no world, I think, where [the effectiveness] is the same level . . . we had with [the] Delta [variant],” Bancel said in an interview with the Financial Times published on Tuesday. “I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to … are like, ‘This is not going to be good’.”
South Korea’s Kospi (KOSPI) led losses in Asia, falling 2.4%, while Japan’s Nikkei 225 (N225) dropped 1.6%. Hong Kong’s Hang Seng Index (HSI) fell 1.6%. The Shanghai Composite (SHCOMP) was flat. China’s economy got some good news Tuesday as its big factories showed signs of a recovery.
European indexes opened about 1% lower before trimming those losses a little during the session.
There is still a lot that’s unknown about the Omicron variant, but scientists are racing to determine its severity, transmissibility and whether it evades current vaccines.
Moderna’s Bancel said in a statement last week that the mutations in the Omicron variant were “concerning,” adding that the company has been “moving as fast as possible to execute our strategy to address this variant.”
The world has settled into a “choppy holding pattern, for clarity about just [how] worried, or not, we should be about the new Covid-19 Omicron variant,” wrote Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a Tuesday research note.
He pointed out that stocks fell in South Korea after the government there shelved plans to ease its Covid-19 restrictions, “highlighting once again, what is really driving markets right now.”
Japan on Tuesday, meanwhile, confirmed its first case of the Omicron variant.
US stocks made a comeback on Monday after an Omicron-spurred selloff late last week. But they opened lower Tuesday, and then extended losses after Federal Reserve Chairman Jerome Powell said the Fed could wind down its stimulus sooner than expected.
“At this point the economy is very strong and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner,” Powell testified before the Senate.
Oil prices are also sliding, after collapsing Friday on fears that the variant would hurt energy demand by eating into the amount of people driving and flying. Both Brent crude, the global benchmark, and West Texas Intermediate, the US benchmark, fell more than 3% to trade below $71 and $68 a barrel, respectively.
— CNN’s Junko Ogura contributed to this report.