Global stocks facea fresh selloff

There was a fall in world share markets and scramble to safer currencies and bonds on Tuesday after the CEO of drugmaker Moderna warned that COVID-19 vaccines are unlikely to be as effective against the new Omicron variant.

Europe’s main bourses jolted 1.4 per cent lower early on, oil shed 3 per cent, Australia’s currency which is highly sensitive to global economic confidence hit a year low while Japan’s safe-haven yen, German government bonds and gold all rose.

“There is no world, I think, where (the effectiveness) is the same level,” Moderna’s chief Stéphane Bancel told the Financial Times in an interview.

“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’,” Bancel said.

The early tumbles meant Europe’s equity markets scratched off Monday’s rebound and were below the levels hit on Friday when traders wiped roughly $2 trillion off global stocks in the initial Omicron rout.

Bancel had earlier said on CNBC that there should be more clarity on the efficacy of COVID-19 vaccines against Omicron in about two weeks, but that it could take months to begin shipping a reworked vaccine designed for the new variant.

“It’s not good news, and it’s coming from someone who should know,” said Commonwealth Bank of Australia currency strategist Joe Capurso.

“Markets have reacted in exactly the way you’d expect them to.”

MSCI’s broadest global equities index which tracks 50 countries was 0.2 per cent lower and heading for only its third red month of the year. It has risen nearly 14 per cent in 2021 whereas emerging market stocks have lost nearly 6 per cent.

Risk aversion also hit the currency markets with the US dollar weakening 0.3 per cent versus its main rivals. The Aussie dollar’s slide of 0.65 per cent left it at its 12-month low of $0.7093 whereas the Japanese yen - traditionally viewed as safe harbour due to its role as a funding currency - was nearing its highest level of the month at 112.95 yen.

There was plenty of data to digest too.

Activity in China’s services sector grew at a slightly slower pace in November, official data showed on Tuesday, as the sector took a hit from fresh lockdown measures as authorities raced to contain the latest outbreak.