Week of November 29, 2021

Amid reports of a potential new COVID-19 variant, U.S. stocks are coming off a holiday-shortened trading session last Friday in which the Dow posted its worst day since October 2020 losing 905 points, or 2.5%. The S&P 500 and NASDAQ also tumbled, posting losses of 2.27 and 2.23%, respectively.

With very little available data, investors are awaiting more clarity on the likely transmissibility and severity of the Omicron variant and whether it will weigh on the efficacy of vaccines. The South African doctor who first raised the alarm over the new variant told the BBC that patients had “extremely mild” symptoms though it is too early to determine how Omicron behaves before it is studied more closely. Initial reports from South Africa are that hospitals are nowhere near overrun but are preparing should conditions deteriorate.

Global oil markets also fell victim to the news of a new variant, with Brent crude tumbling 13% last Friday, in its largest one-day decline since April 2020. In London trading this morning oil prices are recovering along with the equity markets.

With the devastating effects of the Delta variant in recent memory, news of yet another variant has the global investment markets on edge. “Despite the irresistible pull of buy-on-the-dip on tenuous early information on Omicron, we are just one negative Omicron headline away from going back to where we started,” Jeffrey Halley, a senior market analyst at Oanda, wrote in a note. “Expect plenty of headline-driven whipsaw price action this week.”