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Omicron scare pushes global risk assets lower

By Neil Dennis

13:50, 30 November 2021

Charts showing falling asset prices
Markets turn lower again – Photo: Shutterstock

Global markets entered another session of risk-averse selling on Tuesday as fears over the potential economic impact of the spread of new variants of coronavirus continued to cast a pall over investor sentiment.

Riskier assets, such as equities and commodities, fell sharply while safer assets, including Treasury bonds and gold, provided haven support.

Markets have been in a volatile state after last week’s announcement of a new Covid mutation – now called the Omicron variant – caused a major sell-off of risk assets on Friday, with oil prices losing more than a tenth.

While Monday’s session saw some recovery, Friday’s losses were never recouped and by the end of trading most stock indices were off their worst levels.

Stocks tumble

Half an hour before the Wall Street open on Tuesday, index futures were indicating a lower open for US stocks, with the Dow likely to start around 1% weaker and the S&P 500 about 0.9% lower.

In Europe, the FTSE 100 was down 0.7%, while the STOXX Europe 600 shed 0.8%. In Asia, the Hang Seng in Hong Kong lost 1.6% and the Nikkei 225 in Tokyo fell 1.6%.

The latest round of risk aversion was cast on rising doubts that current vaccines offer the sufficient protection to counter the threat of widespread infections from new variants, such as Omicron.

“Markets are awaiting some solid confirmation that the current vaccines offer enough protection against the Omicron variant before jumping back on risk-on trades,” said Francesco Pesole, FX strategist at ING.

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1.08 Price
-0.300% 1D Chg, %
Long position overnight fee -0.0080%
Short position overnight fee -0.0003%
Overnight fee time 22:00 (UTC)
Spread 0.00050


0.66 Price
-0.390% 1D Chg, %
Long position overnight fee -0.0072%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00050


0.66 Price
-0.390% 1D Chg, %
Long position overnight fee -0.0072%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00050


145.00 Price
+0.560% 1D Chg, %
Long position overnight fee 0.0113%
Short position overnight fee -0.0195%
Overnight fee time 22:00 (UTC)
Spread 0.090


Indeed, foreign exchange markets reflected similar risk-off strategies, with emerging market currencies feeling the most pain: the Turkish lira was among the worst performers, down 2.1% against the dollar, while the South African rand lost 1%.

Conversely, the haven currencies performed well: the Japanese yen was up 0.7% against the dollar while the Swiss franc gained 0.6%.

Oil sell-off resumes

Oil prices were, again, victims of the heavy selling due to fears of falling demand should the spread of the virus cause widespread disruption to travel and economic activity, as in the first two Covid waves.

Brent crude shed 3.9% to $70.37 a barrel while the NYMEX West Texas Intermediate lost 4% to $67.19 a barrel.

Haven buys

Among the assets investors ran to in order to give their portfolios some protection was ultra-safe government bonds, such as US Treasury bills.

As investors sought the safety of Treasuries, yields were sent scuttling lower, with the 10-year benchmark yield falling 10.7 basis points to a near two-month low of 1.41%.

Gold was also sought out for its haven qualities – gaining 0.7% to $1,798 an ounce.

Read more: Gold or bitcoin? What’s the best buffer against inflation in 2021?

Markets in this article

Oil - Brent
Brent Oil
75.983 USD
1.511 +2.030%
UK 100
7565.0 USD
46.7 +0.620%
2004.85 USD
-23.96 -1.180%
Hong Kong 50
16280.6 USD
-148.3 -0.900%
Hong Kong 50
16280.6 USD
-148.3 -0.900%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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