The global financial markets reacted Friday negatively to the New COVID-19 variant Omicron that is starting to gain strength in South Africa.
New COVID-19 variant Omicron leads to awful day for markets
The significant downturn is based on the fact that a resurgence of the coronavirus is still possible.
This scenario could trigger new lockdowns and travel bans because the B.1.1.529 variant, also known as Omicron and Nu, is a very heavily-mutated version of the virus.
The financial markets lived through one of the worst days in recent years. Oil also suffered a considerable drop. The pan-European Stoxx 600 experienced a decline superior to 3 percent.
Hong Kong’s Hang Seng Index (HSI) went down 2.7 percent, and Japan’s Nikkei 225 (N225) fell 2.5%.
The Brent crude saw a drop of over 10%. The US crude was hit with a 12% decline.
The Dow Jones Industrial Average dropped 905 points and 2 percent.
It was the worst performance of the Dow since October 2020. As expected, stocks linked to travel, energy, and banking were impacted the most.
The new variant adds another element of uncertainty to the markets that were already quite volatile.
The renomination of Jerome Powell as the Fed chair by President Joe Biden had shaken things up because investors bet on interest rate hikes for 2022.
The US inflation and the solid economic data led many to believe that hikes are unavoidable in the coming months.
Some experts say that the investors were looking for ways to take a pause because the market is overvalued.
Stocks from stay-at-home products like Netflix and Zoom saw an increase. Pfizer has also gone up quite a bit.
Investors fear new lockdowns
Despite the major drop, investors are remaining calm for now. Most of the major players are adopting a wait-and-see attitude towards the situation.
However, some are more optimistic and already predicting a rebound for 2022 after the winter season is over. The optimists believe that most countries will not get back to lockdowns.
A few experts are more pessimistic and say that COVID is still one component that can really hurt the global markets.
The major economies would be in better shape without the constant menace of the virus.
Biden announces travel ban for 8 African countries
The World Health Organization takes this new variant very seriously and scheduled a special meeting to address the issue on Friday.
In addition to South Africa, the variant has also been detected in Botswana and Hong Kong.
The variant is considered to be quite resistant when it comes to COVID-19 vaccines.
Moreover, it is highly transmissible. However, it is not yet clear that Omicron is more dangerous than the previous versions of the virus.
Out of an abundance of caution, many countries have already put in place travel restrictions on flights from certain areas in Africa.
The Biden administration announced on Friday that starting Monday, travel from South Africa, Botswana, Zimbabwe, Namibia, Lesotho, Eswatini, Mozambique, and Malawi is banned.
The United Kingdom had done the same thing. Europe is said to be next.
While scientists in Africa are urging calm, America and Europe are doing their best to avoid a repeat of 2020 when lockdowns slowed the economy, and global financial markets were rattled.
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