Virus Strikes Again!
The threat furnished by the new virus variant is a further addition to existing investor woes such as slowing growth, spiralling inflation and possible tightening of monetary policy in the near future
The new corona virus variant, Omicron, first detected from South Africa last week, was recently designated as a ‘variant of concern’ by the World Health Organization (WHO). A ‘variant of concern’ is the WHO’s top category of worrying virus variants. Omicron is the fifth variant to carry such a designation. The WHO has said that Omicron has a large number of mutations, some of which are worrisome and preliminary evidence suggests an increased risk of re-infection with this variant, in comparison to other variants. There are growing concerns globally that the pandemic and associated lockdown restrictions will persist for far longer than hoped.
News of the Omicron variant triggered an alarm of heavy selling pressure which resulted in global equity indices falling sharply. The US frontline benchmark indices Dow Jones, S & P 500 and Nasdaq ended the fortnight in the red territory, down by 3.33 per cent, 1.88 per cent and 2.33 per cent, respectively. London Stock Exchange’s FTSE 100 index tumbled by 4.14 per cent and on the last trading day of the two-week period suffered its biggest one-day sell-off in percentage terms since June 2020. European benchmark Brent Crude also plummeted by more than 10 per cent on Friday, November 26, 2021, hitting a two-month low as the new variant added to concerns that a supply surplus could swell in the first quarter.
The US central bank policymakers had unanimously decided at their meeting held last month to begin reducing the USD 120 billion in monthly purchases of treasuries and mortgage-backed securities, which was initiated in early 2020 to help nurse the economy through the pandemic. The minutes of the Federal Reserve’s latest policy meeting exhibited that the policymakers would be open to speeding up the elimination of their bond-buying programme if high inflation held and moved more quickly to raise interest rates.
Consumer spending in the United States staged a decent recovery in October 2021, rising by 1.3 per cent along with inflation, rising over the past year at the fastest pace in more than three decades. The country’s commerce department reported on November 24, 2021 that the jump in consumer spending last Virus Strikes Again! The threat furnished by the new virus variant is a further addition to existing investor woes such as slowing growth, spiralling inflation and possible tightening of monetary policy in the near future Global Market Watch month was double the 0.6 per cent gain in the month of September.
Concurrently, consumer prices rose 5 per cent compared with the same period last year, the fastest 12-month gain since the same stretch ending in November 1990. Personal incomes ascended by 0.5 per cent in October after having slipped by 1 per cent in the previous month, exhibiting a distinct reflection of a drop in government support payments.
During the fortnight, the German DAX index and the French CAC 40 index corrected sharply by 5.20 per cent and 4.96 per cent, respectively. Hong Kong’s benchmark index Hang Seng tanked by 4.93 per cent to close at 24,080.52. Technology giants JD and Netease along with China Resources Beer and ENN Energy Holdings will be added to the Hang Seng index effective December 6, 2021. The latest update increases the number of stocks under the main index to 64 from the current 60 stocks. The threat furnished by the new virus variant is a further addition to existing investor woes such as slowing growth, spiralling inflation and possible tightening of monetary policy in the near future.