European markets fall as Moderna boss says vaccine less effective against Omicron

·4 min read

European stock markets slumped into the red on Tuesday, undoing modest rebounds at the start of the week, amid renewed fears that the Omicron coronavirus strain could hamper recovery.

In London, the FTSE 100 (^FTSE) fell 0.3% in afternoon trade, recovering from deeper losses in the day, while the French CAC (^FCHI) tumbled 0.1% and the DAX (^GDAXI) was around 0.2% lower in Germany.

The downturn came as the head of drugmaker Moderna (MRNA) told the Financial Times that COVID-19 vaccines are unlikely to be as effective against the Omicron variant as they have been against the Delta strain.

Stephane Bancel, chief executive of the pharma firm, said: “There is no world, I think, where the effectiveness is the same level . . .we had with the Delta variant.

“I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to . . . are like, ‘This is not going to be good’.”

His tone contrasted with the likes of Pfizer (PFE) and BioNTech (BNTX) which suggested any new vaccine would be able to be modified fairly quickly. On Tuesday, the University of Oxford has said there was no evidence that vaccines would not prevent severe disease from Omicron, but that it was ready to rapidly develop an updated version of its vaccine developed with AstraZeneca (AZN.L) if necessary.

"It’s not known just how less effective they may be, and the waiting game continues as scientists scramble to assess the new variant, but amid this state of uncertainty, nervousness is high," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.

"Energy stocks and banks are among the biggest fallers as investors worry about the economic effect of Omicron, as it risks dampening down demand and becoming a significant set-back for global economy."

It also came as Eurozone inflation soared to a record rate of 4.9% this month, driven by surging energy costs.

This was the highest since the eurozone was created in 1999, piling further pressure on the European Central Bank to act ahead of its meeting next month on 16 December.

Watch: What is inflation and why is it important?

Across the pond, the S&P 500 (^GSPC) fell 0.6% and the tech-heavy Nasdaq (^IXIC) fell 0.1% after the bell in New York. The Dow Jones (^DJI) edged 0.8% lower on opening. Travel and energy stocks led the losses amid concerns fresh restrictions could hit demand.

It came after a positive session on Monday for Wall Street, which reacted positively to news from US president Joe Biden that new lockdowns as a result of the variant were off the cards for now.

US consumer confidence slipped in November amid concerns about the rising cost of living and the pandemic.

The Conference Board’s gauge of consumer morale dropped to 109.5 this month, from 111.6 in October, a bigger drop than forecast. It was the lowest level since February.

Consumers confidence expectations also fell to 87.6 from 89.0 during the period as the emergence of the new variant sparked fresh jitters.

Read more: UK service sector continues to grow as costs rise at record pace

Asian markets slumped in late trading on Tuesday, giving up early gains as investors worried the Omicron variant will prove more resistant to vaccines and could cause further economic disruption.

In Japan, the Nikkei (^N225) ended 1.6% lower on the day, retracting all of the 1.2% gain it made earlier in the session.

The Hang Seng (^HSI) fell 1.6% in Hong Kong, and the Shanghai Composite (000001.SS) closed flat as activity in China's services sector grew at a slightly slower pace in November.

Official data released on Tuesday showed that the sector took a hit from fresh lockdown measures as authorities raced to contain the latest outbreak.

Meanwhile, Hong Kong has widened its ban on entry for non-residents from a string of countries, including Angola, Ethiopia, Nigeria and Zambia. They are not allowed to enter as of 30 November.

Non-residents who have been to Austria, Australia, Belgium, Canada, the Czech Republic, Denmark, Germany, Israel and Italy in the past 21 days will not be allowed to enter the city from 2 December.

Watch: What do we know about the Omicron variant?