Global markets showed signs of steadying on Monday as investors took a deep breath and looked more carefully at the knowns and unknowns of a new Covid-19 variant.
Stocks on Wall Street and in Europe dropped heavily on Friday on initial news of the discovery in southern Africa of the new variant, called Omicron. The World Health Organization labeled it a “variant of concern,†its most serious category. Stocks of companies in industries that had been bouncing back in recent months, like airlines and other travel firms, took big hits as governments began to throw up limits on movement across borders. Oil prices and bond yields fell, signaling an investor flight to safe harbors for their money.
On Monday, with quick answers about the threat from Omicron hard to come by, investors began to contemplate possibilities other than disaster. While the new variant might turn out to be more contagious and vaccine resistant, some reasoned, it might also prove to be less dangerous to the health of the vaccinated or previously infected.
With that in mind, shares in Europe opened mildly positive in early Monday trading, with markets in London, Paris and Frankfurt up less than 1 percent.
Futures markets were predicting that Wall Street too would open higher later on Monday.
In another sign of improved market sentiment, oil prices were moving higher early in the European trading day. The two major benchmarks, Brent crude and West Texas Intermediate, gained 4 to 5 percent.
European markets may have taken a cue from Asia-Pacific stocks, which fell broadly on Monday but not to the extent that other shares tumbled on Friday. Japan’s Nikkei 225 index fell 1.6 percent on a day when the government sealed the country’s borders, just days after opening to short-term business travelers and international students.
But stocks in Shanghai were flat, and Hong Kong’s market ended the day less than 1 percent lower. Other markets in the region also fell by more moderate amounts than global markets on Friday.
