World stock markets are rallying as concerns about the potential severity of the Omicron variant ease.
In New York, the Dow Jones industrial average has jumped by 521 points, or 1.5%, in early trading back to 35,748 points. That’s close to its levels before Thanksgiving, just before the emergence of Omicron spooked markets.
The broader S&P 500 index has gained 1.7%, with technology stocks, travel companies and oil producers all higher.
European markets are pushing higher too, with Germany’s DAX and France’s CAC up around 2.5%. That follows gains in Asia-Pacific markets earlier, where Japan’s Nikkei gained 1.9%, with strong Chinese import figures also lifting the mood.
The FTSE 100 index of blue-chip shares in London now up 98 points at 7331, recovering all its losses after the discovery of the omicron variant rocked markets in late November.
Mining companies lead the FTSE 100 risers, benefitting from optimism about the global recovery. China’s moves to boost its slowing economy, and to pump 1.2 trillion yuan ($188 billion) into the economy by letting banks hold less capital, is also lifting stocks.
Commodities giant Anglo American has jumped 6.5%, with BHP Group gaining 5.6%. Conference organiser Informa, which would be disrupted by lockdowns and travel restrictions, has risen 4%.
UK prime minister, Boris Johnson, told ministers today the early indications are that the Omicron variant appears to be more transmissible than Delta. But, early hospital data from South Africa suggest it could result in less severe illness than previous waves.
Early data from the Steve Biko and Tshwane District Hospital Complex in South Africa’s capital Pretoria, which is at the centre of the outbreak, showed that on December 2 only nine of the 42 patients on the Covid-19 ward, all of whom were unvaccinated, were being treated for the virus and were in need of oxygen.
The remainder of the patients had tested positive but were asymptomatic and being treated for other conditions.
Oil is continuing to strengthen too, with Brent crude up 2.5% today at almost $75 per barrel.
Brad Bechtel of investment bank Jefferies says anxiety over the latest variant is dropping:
Its still a little early to fully shrug off Omicron fully, which is why governments and markets are tip toeing, not running, towards this conclusion, but it is starting to feel a little more constructive again for global growth.
We probably won’t know for sure about Omicron until after the holidays so jumping on now is definitely early to the theme, but the theme is gaining some momentum in the past 48hrs.
British drugmaker GSK also reassured investors, reporting today that its antibody-based COVID-19 therapy with US partner Vir Biotechnology is effective against all mutations of the new Omicron coronavirus variant, citing new data from early-stage studies.
It looks like investors have made up their minds about Omicron, says Fawad Razaqzada, analyst at Think Markets.
After careful consideration, they think it is probably no more dangerous than the Delta variant of coronavirus and that preventative lockdowns and restrictions that we have seen will soon ease. Another major economic shock will thus be avoided….
Investors have been relieved to find out that Omicron hasn’t yet prompted a big rise in hospitalisations and deaths, while some pharmaceuticals (e.g., GSK) have revealed they have come up with treatment against the new strain.
So, there’s hope – hope that at worst, Omicron may be just as transmissible as the common cold, but no more dangerous than some of the other variants of Covid and that current vaccinations are effective against it.