Fears of the ultimate impact of the new omicron coronavirus variant have lessened somewhat over the weekend, but the market remains very vulnerable to further news.
- Markets opened the week with a bounce-back against Friday’s omicron coronavirus variant panic. Stocks, commodities, and non-haven currencies were bid again, but at the end of the Monday’s Asian session results are mixed. In the Forex market, safe haven currencies such as the yen have resumed their rise while the commodity currencies NZD, AUD, and CAD look weak. US and European stock markets and crude oil have risen firmly but markets in Asia have fared badly. Statements from a scientific advisor to the South African government that omicron does not appear to cause worse symptoms, and from Moderna that its vaccine could be easily recalibrated to be fully effective against the omicron variant if necessary, do seem to have lessened the level of fear from Friday. However, the situation remains volatile and markets remain prone to very strong risk-off movement if forthcoming news about the potency of the omicron variant is negative.
- The omicron variant is confirmed to be present in South Africa, the UK, Israel, the Netherlands, Canada, Australia, and Austria. Several countries (most recently Japan) have either entirely closed their borders to non-citizens, while the US and the EU and other countries are imposing a ban on travel from South Africa and other African nations. The South African government is complaining such bans will be useless and damaging and have urged their repeal. The omicron variant has originated in South Africa and is now widespread there. The South African rand fell sharply on Friday, but at the time of writing it has stabilized and is almost unchanged today.
- In the Forex market, trading has drifted towards a risk-off scenario, with the Japanese yen looking like the strongest major currency, while the commodity currencies like NZD, AUD, and CAD look weak. If any bad news about the omicron variant emerges today, we can expect this movement to continue and strengthen.
- After falling by approximately 12% on Friday, WTI Crude Oil has rebounded quite strongly, and is now trading 4% higher from Friday’s closing price.
- Last week saw the fifth consecutive global weekly rise in new confirmed coronavirus cases after two months in which cases fell steadily.
- It is estimated that 54.1% of the world’s population has received at least one dose of a coronavirus vaccination.
- Total confirmed new coronavirus cases worldwide stand at over 261.7 million with an average case fatality rate of 1.99%. Cases are surging in Europe and many countries are reimposing restrictions and tighter entry quarantines.
- The rate of new coronavirus infections appears to now be increasing most quickly in Andorra, Belgium, Bolivia, the Czech Republic, Denmark, France, Germany, Hungary, Italy, Jordan, South Korea, Laos, Lebanon, Luxembourg, Mali, Monaco, Malta, Netherlands, Norway, Portugal, Poland, San Marino, Slovakia, South Africa, Switzerland, Trinidad, the UK, and Vietnam.