Equities and oil sank again on Tuesday after the head of Moderna warned current coronavirus vaccines might be less effective at fending off the Omicron variant, fuelling fears that countries could be forced back into economically painful lockdowns.
Stocks had mostly been edging up after a two-day sell-off that followed news on Friday of the new variant, which some observers said was overdone as billions of people have been inoculated.
But Stéphane Bancel’s comments in an interview with the Financial Times sent shivers through markets again, as he said the high amount of mutations on Omicron and its swift spread in South Africa indicated the present 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.
Tokyo, Hong Kong, Singapore, Bangkok and Jakarta all lost more than one per cent while Seoul sank more than two per cent. London, Paris and Frankfurt opened in the red and futures in New York were also sharply lower. Sydney, Wellington and Taipei closed higher before the interview was published.
London, Paris and Frankfurt opened in the red and futures in New York were also sharply lower
The selling also spread to oil markets where both main contracts plunged more than three per cent, after slowly recovering from Friday’s collapse of more than 10 per cent as demand fears came flooding back.
Tourism-linked firms were among the worst hit with Cathay Pacific losing more than four per cent in Hong Kong – having already been impacted by new restrictions on travel to the city – and Singapore Airlines off more than one per cent.
Moderna CEO Stéphane Bancel said the current coronavirus vaccines might be less effective at fending off the Omicron variant. Photo: Ivan Couronne / AFP“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.”
Uncertainty
Bancel’s remarks came after major firms said they were already working on a jab specific to the new strain. Pfizer chief Albert Bourla said testing could show existing shots “protect less”, which would mean “that we need to create a new vaccine” but added that he did not think the “result will be the vaccines don’t protect”.
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 Organisation 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.
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.
Howie Lee of Oversea-Chinese Banking Corp said if OPEC+ “do pause, it will provide another reason for oil to find a firmer footing”.