LONDON, Nov 30 Reuters - There was a fall in world share markets and the shift to safer currencies and bonds on Tuesday after the CEO of Moderna warned that COVID 19 vaccines are unlikely to be as effective against the new Omicron variant.
The main bourses of Europe fell nearly 1%, oil shed 3%, Australia's currency, which is sensitive to global economic confidence hit a year low, and Japan's safe-haven yen, German government bonds and gold all rose.
Moderna's chief St phane Bancel told the Financial Times that there is no world where the effectiveness is the same, there is no world, I think.
I think it's going to be a material drop. I just don't know how much data we need to wait for the data. But all the scientists I've talked to are like 'this is not going to be good', Bancel said.
The early tumbles meant that Europe's equity markets scratched off Monday's rebound and were below the levels hit on Friday when traders wiped $2 trillion off global stocks in the initial Omicron rout.
Bancel had earlier said on CNBC that there should be more clarity on the efficacy of COVID 19 vaccines against Omicron in about two weeks, but that it could take months to ship a reworked vaccine designed for the new variant.
It's not good news, and it's coming from someone who should know, said Joe Capurso, currency strategist at the Commonwealth Bank of Australia. The broadest global equities index of the MSCI, which tracks 50 countries, was 0.2% lower, and headed for only its third red month of the year. In 2021, it has risen nearly 14%, while emerging market stocks have lost nearly 6%.
It has been harder for Europe's travel and leisure stocks. The biggest monthly fall since the initial COVID 19 panic in March 2020 has resulted in a 20% drop in the number of holidays that have to be cancelled due to fears that holidays will have to be cancelled again.
The U.S. dollar was weakened by 0.5% against its main rivals, a risk aversion was also hitting the currency markets. The Aussie dollar's overnight drop of 0.65% was compared to its 12 month low of $0.7093, while the Japanese yen was near its highest level of the month at 112.98 yen, which is traditionally viewed as a safe harbour due to its role as a funding currency.
There was a lot of data to digest.
In November, activity in China's services sector increased at a slightly slower pace, with the sector taking a hit from new measures as authorities tried to contain the latest outbreak, according to official data released on Tuesday.
The blue chip CSI 300 index closed 0.4% lower, while the Hang Seng Index of Hong Kong fell over 1.5% because of the breach of a strong technical support level of 24,000 points, according to analysts.
In the commodity markets, Brent crude futures fell $2.32, or 3.2%, to $71.12 a barrel. Travel stocks are the worst month since the COVID rout, and oil prices are now down 15% for the month. It comes after a more than 400% surge in prices since that trough.
The euro was about to resume its bounce after the euro zone inflation came in at 4.9%, the highest level since the euro's introduction more than two decades ago.
Even though fast rising food and fuel prices were excluded, it rose to 2.6%, well above expectations.
The currency was last at $1.1350, up from a near 17 month trough of $1.11864 last week when ECB policymakers signalled they still expected inflation to cool.
Omicron worries resulted in the yield on 10 year German bunds, regarded as one of the safest assets in the world, dropping to its lowest in just over a week at 0.345%, and was last down 2 basis points on the day.
Most of the other benchmark 10 year yields in the euro zone fell by a similar amount, while U.S. 10 year Treasury yields fell by 7.5 bps to around 1.45%.
We maintain our view that the ECB's Governing Council will strengthen its patience on the policy rate at the December meeting to look over the inflation surge, analysts at Goldman Sachs said in a note.
The cumulative economic hit over Q 4 and Q 1 will be 0.4% of GDP and 0.2% of GDP in the UK, they said. Blanket lockdowns could cause twice as much damage.