Bullish Omicron assessments boost global markets
A string of bullish assessments from global health leaders downplaying the severity of the Omicron variant boosted global markets yesterday.
Investors shook off concerns over the Covid-19 variant derailing the world’s fight against the pandemic and poured back into stocks.
London’s premier FTSE 100 index shot up 1.55 per cent to close at 7,168.68 points yesterday, while the pan-European Stoxx 600 index climbed more than 1.70 per cent to 470.86 points.
Germany’s Dax 30 rose 2.47 per cent.
The rally was sparked by several of the world’s kingpins in the battle against Covid-19 tempering the impact of the Omicron variant.
The World Health Organisation’s (WHO) chief scientist Soumya Swaminathan said yesterday the present crop of vaccines are strong enough to provide “some protection” against Omicron.
Another WHO official reportedly told Reuters cases of the variant are “mild”.
In the UK, Health Secretary Sajid Javid yesterday insisted people should not tear up their Christmas plans, urging them to adopt sensible precautions such as taking a lateral flow test before attending large gatherings over the festive period.
Javid also reiterated the likelihood of another lockdown over Christmas is “very, very low”.
Analysts were equally bullish on the Omicron drag on markets and the UK economy petering out.
In a research note from Bank of America shared exclusively with City A.M, analysts stressed that even if Omicron turns out to be highly contagious, the impact on the economy is “limited” due to the “roll-out of booster vaccines increas[ing] protection”.
If the new variant outcompetes the dominant Delta strain, the “economic and health risks from the pandemic over the coming months,” Bank of America added.
Travel stocks that were battered by last week’s sell off bounced back sharply yesterday, driven by investors unwinding bets on the variant mauling the sector’s profitability.
British Airways owner IAG was at one point the best performer on the FTSE 100, soaring 5.81 per cent.
Short haul airlines easyJet and Wizz Air took off, scaling 4.33 per cent and 6.94 per cent respectively, leading Michael Hewson, chief market analyst at CMC Markets, to proclaim there had been “a wholesale rebound” in travel and leisure stocks.
Robust performances in London and Europe extended across the Atlantic, with Wall Street’s S&P 500 and Dow Jones both opening higher.
Despite a strong day, markets are expected to remain extremely volatile until the severity of the Omicron variant is pinned down.