The global markets remained stable, with equities on Wall Street and oil prices increasing as investors mulled the known facts and unknown factors of the new version of Covid-19. The S&P 500 benchmark grew by 1.3 percent, reversing a 2.3 percent dip on Friday. That was its worst one since February, and it occurred after the original report of the new variety, named Omicron, being discovered in southern Africa. The WHO classed it as a mutation of significant concern.
As governments tightened limits on cross-border mobility, stocks in industries that had been recovering in recent days, such as airline companies and other tour operators, took a hit. In addition, uncertainty about the economic impact of potential limits drove down oil prices, while bond yields declined as investors flocked to the safety of national debt.
Investors were less concerned about the potential calamity on Monday, as rapid answers on the risk from Omicron were tough to obtain, and some of Friday’s moves were reversed. While the new version may be more infectious and immune to vaccines, it may also be less deadly to those who have been inoculated or were already infected. But, researchers haven’t established any clear conclusions, and the findings of current vaccine studies on the new type might take about two weeks. And stock market losses linked to Covid are becoming weaker and shorter.
The S&P 500 plummeted for a month and a half after the virus initially surfaced in early 2020, before rebounding. A return of instances in October 2020 caused a 5.6 percent decline within a few days, but equities recovered within the week. When the Delta variation initially surfaced in July 2021, it generated a 1.6 percent one-day drop that was quickly recovered.
“We do not know how damaging it is to our health,” Kit Juckes, a strategist at Société Générale, wrote in a note to investors, “however preliminary claims indicate that it isn’t highly hazardous, while minimized by the cautious experts, are highly alluring.” “Against that context, some of Friday’s anarchy has been undone, but only partially.” On Monday, European stocks rallied, with the Stoxx Europe 600 index closing 0.7 percentage points higher. The FTSE 100 in the UK increased by 0.9 percent, while market indexes in Spain and France also increased.
Brent crude and West Texas Intermediate oil futures both climbed 1% and 2.6 percent, respectively. Energy company shares have risen in tandem with crude oil’s recovery. Enphase Energy increased by 3.8 percent, while Diamondback Energy increased by 2.3 percent. The yields on government bonds have also risen. The 10-year Treasury note yield increased by 4 bps, or 0.04 percentage point, to 1.52 percent. The yield fell 16 bps on Friday, the most in a single day since late March 2020. President Biden stated on Monday that the administration’s strategy to tackle Covid in the wintertime did not involve “shutdowns or lockdowns” and instead relies on greater testing, vaccines, and boosters, easing concerns about recently enforced travel restrictions.
On Monday, the Royal Caribbean Group gained 2.8 percent, while the Norwegian Cruise Line gained 0.8 percent. United Airlines’ stock climbed as well. Moderna, a vaccine manufacturer, increased its stock by more than 10%. Unfortunately, not every market recovered. Asia’s stocks plummeted as Japan closed the border just days after reopening them to short-term business visitors and international students. The Nikkei 225 index lost 1.6 percent, while Hong Kong equities fell 1%.