Equities and oil prices suffered again after a drugs firm chief warned current coronavirus vaccines might be less effective at fending off the Omicron variant.
Moderna chief Stephane Bancel’s comments fuelled fears that countries across the globe could be forced back into economically painful lockdowns.
Stocks had mostly been edging up after a two-day sell-off after news of the new variant emerged on Friday but the Moderna boss’s interview with the Financial Times sent shivers through markets again, after he revealed the high amount of mutations on Omicron – and its swift spread in South Africa – suggested current jabs would need to be tweaked.
“There is no world, I think, where [the effectiveness] is the same level… we had with Delta,” the Moderna CEO told the newspaper.
Read more: Hong Kong Bans Arrivals From More Nations Amid Omicron Scare
Tokyo, Hong Kong, Singapore, Bangkok and Jakarta all lost more than 1% while Seoul sank more than 2%. Sydney, Wellington and Taipei closed higher before the interview was published.
The benchmark Nikkei 225 index dropped 1.63%, or 462.16 points, to end at 27,821.76, while the broader Topix index fell 1.03%, or 20.13 points, to 1,928.35.
The Hang Seng Index fell 1.58%, or 376.98 points, to 23,475.26. The Shanghai Composite Index ended slightly up, adding 1.19 points to 3,563.89, while the Shenzhen Composite Index on China’s second exchange ticked up 0.09%, or 2.33 points, to 2,519.27.
The selling also spread to oil markets where both main contracts plunged more than 3%, after slowly recovering from Friday’s collapse of more than 10% as demand fears came flooding back.
Tourism-linked firms were among the worst hit with Cathay Pacific losing more than 4% in Hong Kong – having already been impacted by new restrictions on travel to the city – and Singapore Airlines off more than 1%.
‘Omicron Symptoms Sketchy’
“Information on the Omicron variant is sketchy, how drastic its symptoms will be and how easily it can spread is also unknown, as is the effectiveness of current vaccines,” said Kelvin Wong at CMC Markets.
“I expect more downside risk for the next couple of weeks unless there’s more clarity on the Omicron strain.”
There remains a lot of uncertainty among traders, and experts said it would take weeks before the full effects of the variant are known. The World Health Organization warned it poses a “very high” risk globally.
Investors have suffered a tough few months as they navigate the impact of surging inflation and the prospect of central banks withdrawing the ultra-loose monetary policies put in place at the start of the pandemic.
Supply Chain Warnings
US Federal Reserve boss Jerome Powell warned the latest emergency posed “downside risks to employment and economic activity, and increased uncertainty for inflation.”
In prepared comments ahead of an appearance in front of the Senate Banking Committee later on Tuesday, he also said the virus could “intensify supply-chain disruptions” that have been a major cause of the inflation spike this year.
Oil traders kept tabs on OPEC and other key producers, who are due to decide on whether to press on with their plan to lift output each month in light of the new travel restrictions and the threat of Omicron.
The group had already been contemplating a pause after the United States and several other countries, including China and Japan, released some crude from their reserves to temper a price surge.
MARKETS
Tokyo > Nikkei 225: DOWN 1.6% at 27,821.76 (close)
Hong Kong > Hang Seng Index: DOWN 1.6% at 23,475.26 (close)
Shanghai > Composite: FLAT at 3,563.89 (close)
New York > Dow: UP 0.7% at 35,135.94 (close)
- AFP with additional editing by Sean O’Meara
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