Risky assets fell sharply and safe-havens gained on Friday amid market fears the discovery of a new COVID-19 ‘variant of concern’ could re-trigger wider mobility restrictions.
Equity markets fell across major regions while oil pulled back sharply. Bond yields moved lower and safe-haven currencies gained, though the USD unexpectedly fell.
Not a time to over-react. While we always viewed a vaccine-evading virus mutation as a risk, relatively little about the Omicron variant’s precise risks is known. Assuming widespread lockdowns do not resume, we expect recent trends to resume once one-sided positioning is shaken out.