How dangerous is Omicron?
Friday we saw the black Friday`s discount in the Stock Markets as well, as the strongest ever Coronavirus brought back the risks into the markets.
So far and as we know, the latest mutant strain Omicron (Omicron) is more contagious and may even have the ability to escape immunity, thereby reducing the effectiveness of existing vaccines.
Break out of this variant started in South Africa and has now replaced Delta as the country`s mainstream strain, accounting for 90% of all variants.
Unlike other coronavirus variants, young ages (the 20s to 30s) infected with the virus have moderate to severe symptoms.
Out of Africa, the virus-infected have been seen in Belgium, Israel, United Kingdom, Germany, and Hong Kong, and now they have a new travel ban from S.A, while Israel closed its borders for all arrivals!
Anyway, given these all concerns, so far additional news and hospital records show that it is not as killing and dangerous as it was expected to be in the beginning, therefore, after Friday`s fall, which was the worse since June last year in Europe and one of the worse days in Wall Street, we can see more than 1% recovery in US futures market and almost 6% recovery in WTI price, after about 14% fall on Friday.
However, concerns about the epidemic`s counterattack extinguish the market`s bets on interest rate hikes by major central banks. As many countries already increasing their level of preventive measures and the Omicron virus has added more uncertainty to the economic outlooks, the market expectations from the Fed to raise interest rates in the middle of 2022, fell to 21%, from earlier 32% expectations. Same in Europe, now we have 50% fewer expectations for a rate hike in December from ECB and 25% less from BoE from its earlier 75%.
For today, the main focus in the markets will be on FED chair Powell testimony and the Q&A season right after that. Powell will testify on the economic outlook and FED`s recent monetary policy actions before the Joint Economic Committee, in Washington DC. The testimony will have two parts. The first is reading a prepared statement, then he should answer the committee’s questions. During the Q&A, can see heavy market volatility. At the same time, Treasury Secretary Yellen and four FOMC members will speak.
On the cryptocurrency markets, while markets recovered Friday lost and technically trying to enter again to the positive mood, according to the latest law, now all crypto exchanges have to pay a 2% tax in the UK. Britain’s tax authority, HMRC, does not recognize digital assets as financial instruments, and therefore exchanges are not eligible for financial exemptions.
