European stock markets slump as Omicron continues to dampen sentiment
European stock markets fell on Thursday, having rallied strongly on Wednesday to its best session in four months, as fears of the spread of the Omicron variant continued to rattle investors.
In London, the FTSE 100 (^FTSE) fell 0.5% by afternoon trade, while the French CAC (^FCHI) tumbled 1.6%. The DAX (^GDAXI) was also 1.7% lower in Germany as a rise in Delta variant cases strained the German public health system to breaking point.
It comes as Germany also announced new restrictions for people who are unvaccinated against COVID-19. Chancellor Angela Merkel said those without the jab will be barred from many public places, including non-essential shops and events, unless they have recently recovered from coronavirus.
“Culture and leisure nationwide will be open only to those who have been vaccinated or recovered,” she said.
“We have understood that the situation is very serious and that we want to take further measures in addition to those already taken.”
Meanwhile there are continued reports of new cases of the Omicron variant coming in from across the continent, as well as in the UK.
“In terms of developments about Omicron, we’re still in a waiting game for some concrete stats, but there was positive news early on from the World Health Organization’s chief scientist, who said that they think vaccines will still protect against severe disease as they have against the other variants,” Jim Reid of Deutsche Bank said.
“On the other hand, there was further negative news out of South Africa, as the country reported 8,561 infections over the previous day, with a positivity rate of 16.5%.
“That’s up from 4,373 cases the day before, and 2,273 the day before that, so all eyes will be on whether this trend continues, and also on what that means for hospitalisation and death rates over the days ahead.”
Read more: GSK Omicron-fighting drug cleared by UK regulators
The positive mood came despite the number of Americans filing new jobless claims, which increased last week to 222,000 fresh ‘initial claims’ for unemployment support. This was up from the 53-year low seen in the previous week.
American markets dived on Wednesday, in the most volatile session since March, after the first case of the Omicron variant was reported in the United States, in California.
Wall Street’s benchmark S&P 500 index ended down 1.2% on Wednesday after being up 1.9% earlier in the day, while the Dow Jones Industrial Average lost 1.3% in another rollercoaster session.
It also came as Federal Reserve chair Jerome Powell said officials should consider a faster reduction of monetary stimulus amid high inflation.
Watch: Stocks See-Saw as Omicron Discovered in California
Meanwhile, stock markets were mixed in Asia overnight, helped by advances in Chinese real estate shares, although fears about the Omicron COVID variant capped gains regionally.
In Japan, the Nikkei (^N225) fell 0.7% while the Hang Seng (^HSI) was 0.6% higher and the Shanghai Composite (000001.SS) dipped 0.1%.
Elsewhere, oil (BZ=F) prices fell to their lowest point since mid-August as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed to hold firm on the group’s plans for oil production.
It confirmed plans to add another 400,000 bpd of supply for January 2022.
Peter McNally of Third Bridge said: “Were OPEC+ to add another 400,000 bpd of supply for January 2022, it would be a signal that these countries expect the recovery to continue as previously planned.
“But this year began with Saudi Arabia unilaterally slashing production by 1 million bpd as the winter wave of COVID dashed the pace of recovery.
“This week’s meeting of OPEC+ ministers is shaping up to be one of the most significant since the pandemic recovery demand recovery began, and the key signal will be how much more oil will be added to supply to start the new year.”
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