European stock markets rebound despite Omicron COVID variant fears
European stock markets rebounded on Monday, climbing higher after Friday’s rout, as investors continued to closely assess the threat of a new COVID-19 variant.
Over the weekend, three cases of the Omicron coronavirus strain, which was first detected in South Africa, were found in England, with another six cases reported in Scotland on Monday morning. So far the new variant has already been located in 14 countries.
The B.1.1529 strain is said to contain up to 30 identified mutations, which prompted officials from the World Health Organization (WHO) to call an emergency meeting to discuss what it means for vaccine efficacy as well as other treatments.
Travel and hospitality firms were among the risers on Monday, despite tougher rules on travel and the reintroduction of wearing face masks in different locations including shops, recovering some of the losses from Friday’s sell-off.
“We’ve always known that new variants could well be a problem, and yet over the past 12 months there have been many reports of possible candidates that might be a concern that have come and gone without getting the sort of market reaction we saw on Friday,” Michael Hewson of CMC Markets said.
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“It’s also not that clear this newly renamed Omicron variant is any more deadly than the current more prevalent Delta variant, which for the most part is still causing its own fair share of problems in Europe as it is, having replaced Alpha earlier this year, without the same sort of market reaction.”
The three major indices slumped between 2% and 3.5% at the end of last week amid news of the Omicron strain. US president Joe Biden is due to update the American public on the variant and the US response later on Monday.
Tech stocks and travel companies are among the risers in New York, with oil companies and banks also higher.
Oil prices, including Brent Crude (BZ=F), also rebounded strongly after collapsing in the previous session due to fears the new strain will lower demand over the winter months.
It comes as the Organisation of the Petroleum Exporting Countries (OPEC) will meet this week and decide whether to adjust its output from its current level to an additional 400,000 barrels per day.
Meanwhile, Asian markets fell on Monday after an initial positive start. In Japan, the Nikkei (^N225) fell 1.6% as it announced it would close its borders to new foreign arrivals from Tuesday in a bid to prevent the spread of the virus.
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Prime minister Fumio Kishida said on Monday that Japan will close its borders to new entries of foreign nationals, including business travellers, foreign students and foreign interns.
“This is a preventive, emergency measure to avoid a worst-case scenario,” he said. “This is an extraordinary measure for the time being just until we know more about the omicron variant.”
The Hang Seng (^HSI) slipped 0.8% in Hong Kong, and the Shanghai Composite (000001.SS) closed flat.