Concerns Over Omicron Continue To Weigh Heavily on the Markets

Concerns about Omicron continue to dominate the markets. The Nikkei plummets after Japan stated it would restrict its borders to all foreigners, citing Prime Minister Fumio Kishida’s statement that he is acting out of a “strong feeling of crisis.” For the time being, the forex markets are quiet, with the Yen and Swiss Franc absorbing some of last week’s gains.

Commodity currencies are also making a minor comeback. However, the variety of currency pairs is relatively narrow.

This week, a slew of significant economic data will be announced. The focus will be on US consumer sentiment, ISM indices, and non-farm payrolls. CPI flash, PPI, unemployment rate, and retail sales will be released by the Eurozone. Employment in Canada, Australia’s GDP, and China’s PMIs will all be discussed.

However, news of the Omicron version and its impact on risk sentiment would eclipse the economic news. Fears are subsiding after panic gripped financial markets on Friday when stock prices tumbled following the discovery of Omicron, a novel covid strain identified in South Africa. The market’s reaction, however, may have been worsened by weak market circumstances caused by the US Thanksgiving break.

As Investors Watch the ‘Omicron’ Headlines, the Market Mood Remains Shaky

The frantic flight to safety on Friday resulted in a steep drop in US Treasury bond yields as well as significant losses in global market indices. The dollar fell against safe-haven currencies like the Swiss franc and the Japanese yen, but it outperformed high-beta currencies. Despite the negative news of the novel coronavirus subtype Omicron, the market mood appears to have brightened slightly on Monday. This week, investors are focused on the German inflation report and eurozone business sentiment data, but risk perception will continue to be the dominant market driver.

Despite the fact that the omicron virus has not yet been found in the United States, Dr. Anthony Fauci, the country’s top infectious disease specialist, and the president’s chief medical adviser, predicted on Sunday that the variety would inevitably arise in the country.

Meanwhile, vaccine makers are evaluating the efficacy of current vaccines against the new variety, but no results are expected for another two weeks or more. Pfizer and Moderna both stated that adjusting the vaccine, if necessary, would take roughly 100 days.