The financial world has been in turmoil since Omicron became a household name. With the double threat of a busy season of long-postponed holiday gatherings and a fast-spreading new COVID-19 variant, legislators and traders are eagerly awaiting daily updates regarding the lethality and vaccine resistance of the strain.
Omicron now accounts for the bulk of new coronavirus infections in the United States and around the globe. In New York, 90% of the new infections are the new variant. Labs in the city experience long lines and wait. Although it is not the first time that Wall Street has been confronted with the emergence of new COVID-19 variants since the beginning of the pandemic, their initial effects on the markets were short-lived.
The scenario seems to be similar this time around despite yesterday’s sell-off. Stocks exchanges worldwide tumbled down on Monday, but they appear to be bouncing back rapidly, with Asian markets already closing higher despite initial fears. Tokyo’s Nikkei 225 index rose 2.1% to 28,517.59, and the Hang Seng in Hong Kong added 1.2. In Seoul, the Kospi gained 0.4% to 2,975.03, while the Shanghai Composite index picked up 0.9% to 3,625.13. In Sydney, the S&P/ASX 200 climbed 0.9% to 7,355.00.
Such volatility is typical of the time of year. Market activities usually slow down during the holidays, giving more traction to the news-induced movements. However, based on the latest developments, Omicron is likely to keep influencing the economy worldwide well into 2022.
Investors still fear the effect of the newest coronavirus variants on supply-chain delays and borders closing. European countries are already gearing up for unpopular restrictive measures despite relatively high vaccination rates just in time for the holidays. The Netherlands imposed a new lockdown over the weekend, and several other countries – including the United Kingdom – are establishing or considering restrictions on social gatherings and travel. Previous strains of COVID-19 have also led to factories closing, particularly in China and in the Philippines, which would add significant pressure to the preexisting shortages.
The global economy is still painfully recovering from the impact of the original coronavirus and subsequent Delta variant. Although Omicron may not be as deadly as initially feared, the fast-spreading strain would still have a significant effect.
Besides, developments about the variant are colliding with other economic and financial news, such as the growing concerns about inflation and the Federal Reserve’s announcementlast week of its accelerated plan regarding tapering its monetary and institutional assistance to the economy.
Our knowledge about the Omicron variant is still in its infancy. Depending on the developments in the next few weeks, particularly with the increased gatherings and travels for the holidays and the chronic tests shortages in many parts of the country, its consequences on a still-fragile economy could be far-reaching. Much like we have been doing for the past two years, we are still learning to navigate choppy waters in a fast-changing environment.
After graduating with a Master’s degree in marketing from Sciences Po Paris and a career as a real estate appraiser, Alix Barnaud renewed her lifelong passion for writing. She is a content writer and copywriter specializing in real estate and finds endless fascination in the connection between real estate, economic trends, and social changes. In her free time, she enjoys hiking, yoga, and traveling.