LONDON: Global equity and oil markets slumped Monday on investor panic over the impact of worldwide measures to contain the fast-spreading Omicron coronavirus variant, dealers said.
Asia tanked on concern over a fresh global surge in coronavirus infections, sparking a fierce renewed selloff in Europe, and Wall Street also fell at the opening bell.
Oil tumbled by more than five percent as traders fretted over the fallout for the world’s appetite for energy, which has already taken a heavy blow since the pandemic erupted early last year.
Sentiment was jarred by the future of US President Joe Biden’s massive social spending bill after it lost the crucial vote of a moderate Democrat. The British pound fell sharply after the surprise weekend departure of Prime Minister Boris Johnson’s Brexit minister David Frost.
“After battling endless headwinds in recent weeks, markets have finally been knocked over as the rapid spread of Omicron finally reaches panic mode,” said AJ Bell investment director Russ Mould. “Tighter restrictions across parts of Europe and fears that we could see a circuit breaker in the UK have put a chill in the air for investors.”
Covid variant Omicron 'not a cause for panic': Biden
Meanwhile, the EU’s drug regulator approved a fifth Covid jab as the United States warned of a bleak winter with the Omicron variant spurring new waves of infections globally.
Since it was first reported in South Africa in November, Omicron has been identified in dozens of countries, prompting many to reimpose travel restrictions and other measures.
The Netherlands imposed a Christmas lockdown and Germany tightened restrictions notably affecting the unvaccinated, while media speculation swirls over the re-imposition of tougher UK curbs.
The rapid spread of Omicron has also slammed the oil market and travel stocks as a return to containment measures and travel curbs would hit the aviation and tourism industries as well as dampen demand for fuel.
“Stocks and crude oil have sold off as the markets start the final week before Christmas with a whimper,” added ThinkMarkets analyst Fawad Razaqzada.
“There is some de-risking in the face of headline news that has market participants thinking the Omicron Grinch might steal Christmas after all,” said analyst Patrick J. O’Hare at Briefing.com.
With traders beginning to wind down ahead of the festive season, analysts said trade was thinner and markets more susceptible to swings, but the mood has become increasingly glum as central banks start paring their huge financial support to fight inflation.