Stock market declines return with growing concern about the omicron variant of coronavirus. Moderna’s CEO has stated that current vaccines will lose efficacy with the new strain. “It will take months to have a new specific vaccine available,” he assures; although he clarifies that a dose booster would be effective and will be available “much sooner”.
Investors’ uneasiness about omicron has returned to the market after the statements of the CEO of Moderna, Stephane Bancel, in the Financial Times about the new variant. His forecast is that current vaccines will not be as effective as they have been with previous strains. The manager believes that given the multiple mutations of the South African variant and its rapid spread, the antidotes against the coronavirus will need to be updated next year.
Pfizer and BioNtech, the other companies that developed a vaccine to match Moderna in efficacy based on messenger RNA, said yesterday that it will take around 100 days to adapt to the new strain . “I believe that we will not have the same level of efficiency that we had with the delta variant,” emphasizes Bancel. And alert: “With all the scientists with whom I have spoken they comment:” This is not going to be good “”. The manager assures that Moderna will take months to develop a specific vaccine against the omicron variant, although he has clarified that a stronger dose that works for the new strain will be available “much sooner.” On CNBC he has said that there is a good chance that omicron is already in most countries.
The statements of the top executive of Moderna collide with the tone of calm that politicians and public health experts have had. There is still no scientific evidence of how potentially harmful the omicron strain can be, but the WHO has already issued the warning signal that the new variant could have serious consequences with a rapid rise in infections.
In this sense, the director of the European Medicines Agency (EMA), Emer Cooke, pointed out this Tuesday that the agency has plans to accelerate the adaptation of vaccines to the new omicron variant if necessary, a process that has been estimated which will take between three and four months.
In an intervention in the European Parliament, Cooke wanted to send a message of caution in the face of the new variant and insisted that many elements of the new variant are still unknown to determine whether existing vaccines will have to be adapted.
“We do not yet know if this will be needed, but in any case we have contingency plans prepared. We work with regulators because we expect the best, but we are prepared for the worst,” said the head of the EMA.
Yesterday’s bounce in the market was a mirage . The Asian stocks register today a new session of strong declines before the new concern. The declines in the main stock markets of the continent exceeded 1.5% with the Japanese Nikkei and Hong Kong’s Hang Seng as the main affected. The price of a barrel of Brent oil for delivery in January began the session this Tuesday with a fall of 3.22% in the London futures market, and is approaching the barrier of 70 dollars a barrel (70.8 Dollars). And the falls of the European bags exceed 1% .
Fed Chairman Jerome Powell has also not helped keep his cool. Yesterday in the Senate he said that the omicron variant together with the rebound in coronavirus cases represent a threat to the US economy. According to the banker, concerns about the new variant could “reduce people’s willingness to work in person, slowing down progress in the labor market and intensifying supply chain disruptions.” Powell’s scenario poses a devilish horizon for the Fed, which has already announced the withdrawal of stimulus, with the threat of an economic slowdown and uncontrolled prices.
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President Joe Biden yesterday tried to call for calm. “The omicron variant is cause for concern, but it is not a cause for panic.” The president ruled out that he is considering the implementation of generalized confinement measures in the United States. The president urged Americans to be fully vaccinated, including booster doses, and to resume the use of masks in closed spaces to stop any spread.
For the market, the situation is the one that displeases him the most: uncertainty. “The information on the omicron variant is incomplete, it is also unknown if the symptoms are more severe and its speed of spread, as well as the effectiveness of current vaccines,” they comment from CMC Markets. “We expect more downside risk over the next two weeks, unless there is more clarity on the new one.”
The economist Juan Ignacio Crespo recalls that ” the reaction of the markets yesterday is still very similar to what they had on March 10, 202 0.” The rebound that the market registered yesterday has faded while the perception that the authorities and the scientific community are having. If yesterday the promise of having new vaccines by the beginning of 2022 was promising and satisfied the market, today it seems a late response. Most countries have decided to close their borders for flights from Africa. And Japan and Israel have already banned foreigners from entering.
“It seems that Western governments are not up to the task of applying harsh confinements again, probably because they know the social, economic and, above all, political cost, which is usually what worries them most, that these types of measures entail,” they point out from Link Securities. But until there are answers about the dangerousness of omicron, tension will reign in the market.