New variant of Covid: when will sales stop in global markets?

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The term FUD (fear, uncertainty and despair) commonly used in the cryptocurrency market seems to be the order of the day, even in traditional financial markets like Black Friday, it really lived up to its name.

That day, financial markets around the world sold out, as a result of panicked investor sales, caused by fear of a new strain of COVID-19, which has been found to be resistant to vaccines.

Securities markets that have so far performed well have been shaken by the uncertainty of the new covid strain, as market watchers insist that volatility could continue as more countries risk the spread of the variant. .

Global markets shaken by the new covid variant

Wall Street was having a bad day as the Dow Jones Industrial Average closed the trading session down 2.53% with its base points at 34,899.34. This decline represents the largest percentage drop in indices in more than a year. The S&P 500 was not left out, as the index stood at 4,594.62 basis points, up 2.27%, its worst one-day drop since February 2021. The Nasdaq Composite also fell 2.23%, to 15,491.7 basis points, its biggest one-day drop. low in two months.

European stocks saw their biggest liquidation in 17 months, as the FTSE 100 lost 3.64%, with its base point currently trading at 7,044.03 and the S&P Europe 350 losing 3.75%, currently trading 1,847.88 basis points. Asian markets were also left out with the NIKKEI 225 losing 2.53%, currently trading at 28,751.62.

The cryptocurrency market, known for its rapid volatility, also suffered a loss. The market capitalization lost 8.78%, going from 2.62 trillion in the early hours of the day to 2.39 trillion. The flagship cryptocurrency asset, Bitcoin, suffered a loss of $ 6,000 a day, after trading a daily high of $ 59,450, trading at $ 53,569.76, a decrease of 9.89%. . Altcoins were not left out, as most of the top 50 altcoins recorded double-digit losses.

The oil market had a major impact, as concerns about COVID-19, along with a coordinated release of U.S.-orchestrated reserves, led to a massive sell-off in the market. The world reference, Brent crude, lost 11.32%, to currently trade at $ 72.91 a barrel, well below the reference $ 80. The US benchmark, West Texas Intermediate (WTI), lost 13.04%, currently trading at $ 68.17 a barrel, below the $ 70 trading area. This is its biggest one-day drop since April 2020.

A new variant, a new name … This time it’s called ‘Omicron’

The virus was first referred to by the code name B.1.1.529. However, on Friday, the World Health Organization (WHO) gave the virus a new name. The WHO assigns the new variants a Greek letter, in order to provide a non-stigmatizing label that does not associate the new variants with the place where they were first detected. The WHO has now decided to name this new variant Omicron.

According to The Guardian, Omicron was identified on the 23rdrd of November and highlighted as worrying about its high number of mutations, which could lead it to evade immunity. It was linked to an increase in the number of cases in Gauteng province in South Africa, an urban area containing Pretoria and Johannesburg, in the last two weeks.

The report also explains why this new variant has scared the government. He explains that Omicron has more than 30 mutations in its ear protein (the key that the virus uses to unblock cells in our body), which is more than double the number that Delta carries. Such a dramatic change has raised concerns that antibodies to previous infections or vaccinations are no longer well equated. It reads that based solely on knowing the list of mutations, scientists predict that the virus will be more likely to infect or reinfect people who have immunity to earlier variants.

Due to the fact that Omicron is resistant to vaccines, it caught the attention of the international community, with the chief medical officer of the UK Health and Safety Agency describing the variant as the “The most worrying thing we’ve seen.”

Omicron has forced some countries around the world to quickly set travel restrictions on known countries to have a case for the new variant, which so far includes South Africa, Botswana, Hong Kong, Belgium and Israel. The United Kingdom, at the time of writing, has placed travel restrictions on 10 African countries, while the United States has placed restrictions on 7 countries so far.

What they are saying

Keith Lerner, co-investment director at Truist Advisory Services, said: “A flight to safety is underway with the U.S. Treasury yield 10 years down. The next cause of the sale is yesterday’s announcement of a new variant of COVID-19 at South Africa, which investors fear could affect economic growth. “

Greg Bassuk, CEO of AXS Investments in Port Chester, New York, said: “The bottom line is that this is proving that COVID remains the investor narrative, much of the current movement is driven by the South African variant. We’ve been talking about four or five factors that have been driving activity over the last two months. (fears of inflation, some economic data, Fed policy), but what we have seen over the last year is that the big news regarding COVID ended up eclipsing some of these other factors to a substantial degree and that is what is driving current market activity “.

CNBC’s Jim Cramer said: “When I read this there is one [case] in Belgium and one in Botswana, we will wake up next week and find one in that country. And I will not recommend anyone to buy anything today until we are sure that this will not happen, and I cannot be sure that it will not happen. “

Paul Hickey of Bespoke Investment Group stated: “It is important to stress that very little is known at this time about this latest strain, including whether it can evade vaccines or the severity it is in relation to other mutations. Therefore, it is difficult to make informed investment decisions at this time.”

Ajene Oden of BNY Mellon Investor Solutions stated: “Friday is the day after Thanksgiving, probably not so many traders at the desks, with an early closing today. So potentially lower liquidity is causing part of the downturn. But the reaction we’re seeing is an opportunity to buying for investors. We need to think long term. “

Bottom line

While it’s hard to say whether or not the sale will continue because there is little information on the mortality of this new strain, investors need to prepare for a very volatile week as headlines are set to control emotions of traders and ultimately the market.