European stocks tumble on doubts about vaccine efficacy against Omicron

European stocks fell on Tuesday and were set to end the month 3 per cent lower after vaccine maker Moderna’s head cast doubts over the efficacy of Covid-19 shots against the newly detected Omicron variant.

The pan-European Stoxx 600 dropped 1.5 per cent to hit its lowest levels in nearly seven weeks. Germany’s Dax, France’s Cac 40 and UK’s Ftse 100 also slipped more than 1.5 per cent each.

Global stocks tanked after Moderna chief executive Stephane Bancel told the Financial Times that existing Covid-19 vaccines are unlikely to be as effective against the newly detected variant as they have been previously.

“We’re hearing two sides of the story that this is a highly contagious variant, so naturally you have classic risk-off moves in the market, but also that its effect on people that are vaccinated is much lower,” said Daniela Sabin Hathorn, markets analyst at IG.

European shares regain ground after Omicron sell-off

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“That duality is being reflected in equities, where you see big risk-off moves, driven by headlines followed by corrections the next day.”

Oil stocks tumbled 2.9 per cent, tracking a drop in crude prices, while bank stocks sank 1.8 per cent to their lowest in more than two months.

Travel & leisure stocks shed 2.7 per cent, with British airline easyJet sliding after reporting softer demand in the first quarter following the emergence of the Omicron variant.

The index is set to log its worst month since the height of the pandemic in March 2020, dropping more than 20 per cent in November.

The pandemic-sensitive sectors slumped last week when the Omicron variant was first detected in South Africa, wiping out roughly $2 trillion off the value of global stocks on Friday.

“Investors are weighing what this all means for economic growth and monetary policy, but ultimately, unless we go into a total lockdown again, there is still positive momentum left for European equities heading into 2022,” Hathorn said.

Video games maker CD Projekt plunged 7.7 per cent to the bottom of Polish blue-chip index WIG20 after its profit fell significantly short of expectations in the third quarter.

Sweden-based automaker Volvo Cars slipped 3 per cent after posting a dip in quarterly operating profit and monthly sales volumes amid a global semiconductor shortage.

Spanish fashion retailer Inditex fell 4.2 per cent after saying that Marta Ortega, daughter of its founder, will replace Pablo Isla, who successfully led the company for a decade. – Reuters