European equities drop as Omicron reaches United States

LONDON – European stock markets slid on Thursday with sentiment hit by the first Omicron case in the United States, but oil rallied before an OPEC output call.

Oil prices rose strongly on expectations OPEC and its allies will pause their modest monthly crude production increase, while the dollar was mixed on the eve of key US non-farm payrolls data.

Nearing midday in the eurozone, Frankfurt and Paris shed 1.1 percent and 0.7 percent respectively after a mixed Asian session.

London stocks lost 0.6 percent in late morning deals, with drugmaker GlaxoSmithKline slipping 0.2 percent despite news that its Covid antibody treatment appeared to be effective against the new Omicron variant.

Wall Street suffered a late plunge on Wednesday following news that Omicron had arrived stateside.

– ‘Spread of new enemy’ –

“The overall tone remains gloomy,” summarised IG analyst Chris Beauchamp.

“The discovery of US cases of the new variant show that the spread of this new enemy has already begun.”

News that a patient had come down with the new variant sent shivers through US investors who fear authorities will be forced to reintroduce strict containment measures or even lockdowns, derailing the recovery in the world’s top economy.

That comes on top of a widespread belief the Federal Reserve will end its vast bond-buying financial support programme quicker than expected and begin hiking interest rates next year to prevent inflation — now at a three-decade high — from running out of control.

Traders were already feeling uneasy in recent weeks on concerns about the sharp rise in prices around the world caused by supply chain snarls, a spike in energy costs and a labour shortage.

The announcement of Omicron — and warnings that vaccines may not be as effective against it — sent them over the edge on Friday.

Experts say it will take weeks to fully understand the true danger of Omicron, though the World Health Organization said vaccines would probably fend off the worst of the variant. 

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