Markets on Alert as Omicron Covid Variant Sweeps Stocks, Bitcoin

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Key Takeaways

The new Omicron Covid variant threatens to derail the upside swing in stocks
Bitcoin aims to regain its valuation above $60,000 per coin after Friday’s market rout

What’s on Focus in the Markets?

The new Covid-19 variant, Omicron, has put the world financial markets on high alert. After it was first discovered in South Africa on Friday, the new virus strain has been spotted in the UK, Israel Australia, and more.

What’s more concerning, and responsible for the strong market reaction on Friday, is that the virus could perhaps evade current vaccines. To this end, global markets, including stocks, oil, and bitcoin, sold off at the end of last week.

In more detail, the 30-stock Dow Jones Industrial Average suffered its worst day of the year as it dropped 905 points. At one moment, the US benchmark index was down more than 1,000 points. In addition, the S&P500 tumbled 2.3%, while the Nasdaq Composite declined 2.2%.

Tech stocks were among the sectors that hit the least as they showed solid resiliency during lockdown periods last year while real-economy shares fell.

Meanwhile, oil prices slumped more than 11% Friday along with energy stocks. The decline was underpinned by renewed fears major economies could limit travel and economic activity.

What’s the Latest News on Bitcoin?

The cryptocurrency market followed suit even though major digital assets withstood the selling pressure for a few hours on Friday. During the afternoon hours, when US stocks had already closed their shortened regular session, bitcoin began sliding.

By the end of the session, the orange coin had erased about 8% of its price. As a result, it hit a six-week low of $53,500 per token. Further, during weekend market activity, the price of bitcoin was pressured but managed to claw back some losses and climbed above $57,000 apiece.

Elsewhere in the crypto space, the price of Ether, the second-biggest coin, was also slammed. The selling pressure knocked away more than 12% from the Ethereum token’s valuation as it slipped to a one-month low. More precisely, Ether tumbled to levels below $3,900. Bulls, however, were quick to buy the dip, and over the weekend, the price advanced above $4,300 per coin.

What’s the Price of Gold?

Gold, in the meantime, had mixed reactions to the looming threat from the newly discovered Covid variant. The precious metal initially received a boost as it gained about $24, or 1.4%, to peak at $1,815 per troy ounce. Later on Friday, however, gold prices tumbled to their opening levels near $1,790, erasing almost all daily gains.

What’s Next for Traders and Investors?

The panic around the Omicron Covid strain continues this week. Moreover, trading activity in all asset classes is likely to be defined by new developments over the concerning situation. With this in mind, heightened volatility could be expected in risk assets like stocks, cryptocurrencies, and commodities.

What investors will be following is updates from health authorities regarding the Omicron variant. So far, they have provided little information about potential dangers. On the bright side, a report from South African health experts says Omicron has only “mild” symptoms.

It’s worth noting that vaccine maker Pfizer said the company will need roughly 100 days to come up with a remedy in the case already approved vaccines do not protect against the virus.

On the economic front, it’s non-farm payrolls week. That means market participants will be watching for Friday’s jobs number in the keenly-watched non-farm payrolls report.

In other news, Federal Reserve Chairman Jerome Powell will give his testimony before US lawmakers today. He is expected to lay out fresh insights into the US central bank’s monetary policy changes.

Today’s Economic Calendar (EST times)

10:00 am, USD, Fed Chair Powell Testifies
15:05 am, USD, FOMC Member Powell Speaks