Stocks, oil prices rebound from Omicron rout

Stocks, oil prices rebound from Omicron rout

Frankfurt, London and Paris's equities advanced, having tumbled Friday by around four per cent on worries of a major hit

Traders on the floor of the NYSE. Credit: Reuters Photo

US and European stocks as well as oil prices rebounded Monday from a pre-weekend slump that was sparked by fears over a new variant of Covid-19.

Frankfurt, London and Paris's equities advanced, having tumbled Friday by around four per cent on worries of a major hit to the global economy. On Wall Street, all three major indices snapped more than a percentage point higher at the opening bell, having lost more than two per cent on Friday.

"The panic has passed for now," OANDA analyst Craig Erlam told AFP. "There were no overly concerning developments over the weekend and so investors are testing the water again — but sentiment will remain fragile."

Oil also rallied, with WTI, the US benchmark crude contract, gaining more than six per cent, as investors mulled Omicron's threat to energy demand.

Also Read — Equities, oil prices, US Treasury yields all drop on Covid variant fears

WTI and international benchmark Brent shed more than 10 per cent in value on Friday in their worst day since the US contract briefly fell into negative territory at the outset of the pandemic. analyst Patrick O'Hare said investors' "positive disposition is predicated partly on an embrace of the buy-the-dip trade and partly on the burgeoning hope that Omicron can be corralled with current vaccines, current treatments, and/or new vaccine formulations that can be ready relatively soon."

Asian bourses, however, fell further on lingering uncertainty over the new virus strain.

G7 health ministers were to hold an emergency meeting Monday on the new strain, as experts race to understand what Omicron means for the fight to end the pandemic.

"The anxiety attack on financial markets shows signs of alleviating, as investors pause for breath and spot signs of optimism while scientists race to establish the severity of the new variant," said Hargreaves Lansdown analyst Susannah Streeter.

Also Read — OPEC+ postpones JMMC meeting to discuss Omicron Covid strain

Equities around the world went into freefall Friday on news of the heavily mutated variant, which some fear could evade vaccines, as it forced several governments to throw up flight bans from southern Africa, where it was discovered, and introduce fresh containment measures.

Investors' nerves were soothed somewhat after a South African doctor, who raised the alarm over Omicron, said over the weekend that dozens of her patients suspected of having the new variant had only shown mild symptoms and recovered fully without hospitalisation.

US pharmaceutical company Moderna said Friday it will develop a booster shot against Omicron.

"Amid the doom which took hold as doors were slammed shut on travel routes from Africa and increased restrictions were imposed, there are glimmers of hope," said Streeter. "There are reports from doctors in South Africa that Omicron infections don't seem more severe and the World Health Organization's appeal for caution also appears to have calmed some nerves."

However, the WHO also warned on Monday that Omicron poses a "very high" risk globally, despite uncertainties about the danger and contagion levels of the new strain.

The Covid variant has compounded an already jittery mood on trading floors caused by surging inflation and central banks starting to roll back their ultra-loose monetary policies to prevent prices from running out of control.

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