The new Covid-19 variant will temporarily wobble financial markets, but concerns will be quickly shrugged off, said the CEO of a leading financial advisory and fintech.
The new Covid-19 strain discovered in southern Africa weighed on global markets on Thursday. Travel stocks, hospitality firms, and bank stocks were amongst the hardest hit.
“Experts are determining whether the new variant is more transmissible or more deadly than previous ones,” said deVere Group’s Nigel Green.
The World Health Organisation met on Friday to analyse the new variant and to determine if the B.1.1.529 strain should be designated a variant of “interest” or of “concern.”
The variant, which was identified on Tuesday, is said to carry an “extremely high number” of mutations.
On Friday, Asia Pacific markets were down 2%, European stock futures predicted a more than 2% drop at opening trades. Meanwhile, U.S. stock futures also opened lower, trading only until 1p.m. after Thursday’s Thanksgiving holiday.
“The fact that a new strain has been discovered and, critically, that at this stage we know little about it has caused jitters in the financial markets, which loathe uncertainty. The headlines have caused a knee-jerk reaction,” said Green.
Wall Street closed
“In addition, Wall Street was closed (Thursday) meaning that a large bulk of global trades were missing, making other moves more pronounced.”
The deVere CEO added that this wobble is likely to be temporary with markets remaining bullish for the time being.
“Shares have jumped 16% this year with investors focusing on the post-pandemic economic rebound. They largely shrugged off the Delta variant that caused a mini wave of market nerves in the summer.”
He said that it’s likely that markets will do the same with this new variant.
“This is because, as Delta showed, mutations are now expected and we have more of a blueprint about how to deal with them.
“Instead, financial markets will be focusing on other pressing issues including high inflation caused by supply side bottlenecks and the likelihood of a quicker pull away from ultra-loose monetary environment.”
The deVere CEO concluded that, “markets will temporarily wobble on the uncertainty of this new Covid variant, but will remain bullish and largely focused on other issues.”