UK and US stocks ended lower Monday, pulling back from last week’s record highs amid reports that two vaccine doses may not be enough to fight the COVID-19 omicron variant. It has also been reported that at least one person in the UK has died with the Omicron coronavirus variant, the UK’s prime minister, Boris Johnson, has said. Health Secretary Sajid Javid told MPs Omicron now represented 20% of cases in England.
Risk was shunned on the new variant fears and the FTSE 100 closed down 0.73% at 654. S&P 500 fell a similar margin, ending down 0.9% to 4,668.97, the Nasdaq Composite dropped 1.4% to 15,413.28 and the Dow Jones Industrial Average was 0.9% lower at 35,650.95. The 10-year US Treasury yield also fell 8 basis points to 1.41% while the two-year Treasury yields fell 3 basis points to 0.63%. High-beta currencies, which track equities, are being weighed by the risk-off sentiment with AUD on the back foot vs the safe-haven yen.
The fears have merged as the COVID-19 vaccines from AstraZeneca (AZN) or Pfizer (PFE) and BioNTech (BNTX) have been reported to be substantially less effective at warding off omicron than earlier variants of the virus, CNBC has stated, citing a new University of Oxford study.
This comes as the variant spreads at an alarming rate. The UK’s Health Secretary Sajid Javid said the UK Health Security Agency (UKHSA) estimated the current number of daily infections was around 200,000. Omicron has already risen to more than 44% of cases in London and is expected to become the dominant variant in the city in the next 48 hours, he said.
Additionally, the BBC’s medical editor Fergus Walsh argues that with Omicron doubling every two to three days, it could go from a small to a huge number very quickly. Data also suggests Omicron is more transmissible than previous variants, with cases doubling in the UK every two to three days. As a consequence, the UK has raised its Covid alert level and reintroduced restrictions amid concerns that Omicron poses a “rapidly increasing risk to the public and healthcare services”.
In other parts of the world, as of December 9, the Omicron variant had been identified in 63 nations. In the US, at least 29 states and Washington DC. In Australia, the fifth Covid ‘variant of concern’, first identified in South Africa in November, has been detected in four Australian states and territories although domestic border restrictions in Australia have eased. The variant is said to be becoming dominant in Europe.
Meanwhile, the Asian Development Bank on Tuesday trimmed its growth forecasts for developing Asia for this year and next to reflect risks and uncertainty brought on by the new Omicron coronavirus variant, Reuters reported.
The Manila-based lender now sees 2021 gross domestic product (GDP) growth of 7.0% for developing Asia, down from 7.1%, and 2022 growth of 5.3%, down from 5.4% in September.
“COVID-19 has receded in developing Asia, but rising infections worldwide and the emergence of a fast-spreading variant suggest that the pandemic will take time to play out,” the ADB said in a supplement to its Asian Development Outlook report.
Reuters has also reported that most of developing Asia’s subregions are forecast to grow slower than previously thought this year, due in part to a weak recovery in China.