Omicron vaccine warning triggers fresh global selloff
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[November 30, 2021] By
Marc Jones
LONDON (Reuters) - There was a fall in
world share markets and scramble to safer currencies and bonds on
Tuesday after the CEO of drugmaker Moderna warned that COVID-19 vaccines
are unlikely to be as effective against the new Omicron variant.
Europe's main bourses jolted 1.4% lower early on, oil shed 3%,
Australia's currency which is highly sensitive to global economic
confidence hit a year low while Japan's safe-haven yen, German
government bonds and gold all rose.
"There is no world, I think, where (the effectiveness) is the same
level," Moderna's chief Stéphane Bancel told the Financial Times in an
interview.
"I think it's going to be a material drop. I just don't know how much
because we need to wait for the data. But all the scientists I've talked
to . . . are like 'this is not going to be good'," Bancel said.
The early tumbles meant Europe's equity markets scratched off Monday's
rebound and were below the levels hit on Friday when traders wiped
roughly $2 trillion off global stocks in the initial Omicron rout.
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Bancel had earlier said on CNBC that there should be more clarity on the
efficacy of COVID-19 vaccines against Omicron in about two weeks, but
that it could take months to begin shipping a reworked vaccine designed
for the new variant.
"It's not good news, and it's coming from someone who should know," said
Commonwealth Bank of Australia currency strategist Joe Capurso. "Markets
have reacted in exactly the way you'd expect them to"
MSCI's broadest global equities index which tracks 50 countries was 0.2%
lower and heading for only its third red month of the year. It has risen
nearly 14% in 2021 whereas emerging market stocks have lost nearly 6%.
Risk aversion also hit the currency markets with the U.S. dollar
weakening 0.3% versus its main rivals. The Aussie dollar's slide of
0.65% left it at its 12-month low of $0.7093 whereas the Japanese yen -
traditionally viewed as safe harbour due to its role as a funding
currency - was nearing its highest level of the month at 112.95 yen.
Graphic: Rising COVID-19 case numbers,
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ECONOMIC HIT
There was plenty of data to digest too.
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![](../images/113021pics/busine86.jpg)
A man looks at stock market monitors in Taipei January 22, 2008.
REUTERS/Nicky Loh/File Photo
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Activity in China's services sector grew at a slightly slower pace in November,
official data showed on Tuesday, as the sector took a hit from fresh lockdown
measures as authorities raced to contain the latest outbreak.
China's blue chip CSI 300 index closed 0.4% lower while Hong Kong's Hang Seng
Index shed over 1.5% exacerbated by breach of a strong technical support level
of 24,000 points, according to analysts.
In the commodity markets, Brent crude futures fell $2.32, or 3.2%, to $71.12 a
barrel after slipping to the lowest level since Sept. 1.
A bounce in the euro continued though as strong consumer spending boosted
Italian GDP data, a day after Germany's inflation rate hit its highest in
decades at 6% year-on-year.
Euro zone-wide figures are due shortly. The single currency was last at $1.1350
well up from a near 17-month trough of $1.11864 last week when ECB policymakers
signalled they still expected inflation to cool.
Omicron worries though meant the yield on 10-year German Bunds -- regarded as
one of the safest assets in the world -- dipped to its lowest in just over a
week at -0.345% and was last down about 2 basis points on the day.
Most other benchmark 10-year yields in the euro zone fell by a similar amount,
while U.S. 10-year Treasury yields tumbled 7.5 bps to around 1.45%.
"We maintain our view that the ECB’s Governing Council will reinforce its
patience on the policy rate at the December meeting to look through the
inflation surge," analysts at Goldman Sachs said in a note.
"Additional targeted and regional restrictions, rather than blanket lockdowns,"
will see "a cumulative economic hit over Q4 and Q1 of about 0.4% of GDP in the
euro area, and 0.2% of GDP in the UK," they added. Blanket lockdowns though
could cause twice as much damage.
(Additional reporting by Scott Murdoch in Hong Kong; Editing by Peter Graff)
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