Global Equities and Oil Prices Plummet Amid Concerns over New Coronavirus Variant

Strategic Insights -

A new coronavirus variant, designated Omicron by the World Health Organization, has sparked a global sell-off in companies most exposed to the pandemic, causing the steepest decline in global equities and oil prices in over a year. The discovery of the variant, which is believed to be behind a surge of cases in southern Africa, has raised concerns about its ability to evade Covid-19 vaccines and spread more quickly than the Delta variant. As a result, investors turned to havens, causing a dash for safety and a sharp decline in global markets.

Key Takeaways:

  • The World Health Organization has designated the new coronavirus variant, Omicron, a "variant of concern" due to its potential increased risk of reinfection.
  • The FTSE All World index shed about 2.3 per cent by the New York close, reflecting declines in the US, Europe, and Asia.
  • Crude benchmarks on both sides of the Atlantic tumbled roughly 10 per cent by early afternoon in New York.
  • Shares in British Airways parent IAG, German carrier Lufthansa, and aircraft maker Airbus dropped more than 10 per cent.
  • US airlines United, American, and Delta fell by similar margins, with shares in vaccine makers Moderna and Pfizer soaring 21 per cent and 7 per cent, respectively.
  • Other pandemic beneficiaries, such as meal-kit company HelloFresh, grocery delivery group Ocado, and online fashion retailer Zalando, were among the small number of gainers in Europe.
  • The EU and UK imposed travel restrictions on a group of southern African nations, while Israel has banned travellers from South Africa.
  • The shortened US trading day on Black Friday exacerbated price fluctuations, with trading volumes thin in some markets.

Statistics:

  • The FTSE All World index declined by 2.3 per cent by the New York close.
  • Crude benchmarks on both sides of the Atlantic fell roughly 10 per cent by early afternoon in New York.
  • The Vix index rose 10 points on Friday to 29, the biggest increase since early 2021.
  • The yield on the benchmark US 10-year Treasury note fell 0.15 percentage points to 1.497 per cent, its biggest fall since March 2020.

Sources:

  • The FTSE All World index declined by 2.3 per cent by the New York close: "The FTSE All World index shed about 2.3 per cent by the New York close, reflecting declines in the US, Europe and Asia." - [No exact date], The Financial Times, [No exact title]
  • The Vix index rose 10 points on Friday to 29: "The Vix index, a measure of expected volatility in Wall Street stocks over the next month, rose 10 points on Friday to 29, the biggest increase since early 2021." - [No exact date], The Financial Times, [No exact title]
  • The yield on the benchmark US 10-year Treasury note fell 0.15 percentage points to 1.497 per cent: "The yield on the benchmark US 10-year Treasury note fell 0.15 percentage points to 1.497 per cent, its biggest fall since March 2020." - [No exact date], The Financial Times, [No exact title]