Could The New COVID Variant Omicron Wreak Havoc On The Financial Market Over The Christmas Period?

Posted by

The biggest uncertainty with the new Covid-19 Variant, Omicron, is in the lack of research on vaccine effectiveness with this new strain. Fears of another lockdown and evidence of an increase in the number of people infected hangs like a heavy cloud over the end of this year.

There has been some indication that Omicron could slow the economy but also ease inflation. This is because the inflation rate is usually set in December – as is the case with the Bank of England. Some feel that increases in inflation will be delayed until the new year if better market certainty can be provided. The high inflation rates of this year were seen because of increased production costs and increased demand for certain goods and services – fuelled by online shopping during lock-down boredom and excited cafe goers when places started reopening.

The new wave of uncertainty has caused fluctuations in the market. It is quite clear by now that any negative announcements related to the pandemic causes a downward turn in the market. The announcement of Omicron, in particular, caused a dip in the market and some investor advice is to take advantage of this and “buy low”. However, there should not be concern about the lasting effects of these downward turns because of the quick recoveries seen this year.

The travel restrictions imposed on southern African countries will negatively affect those economies. Even more so because the summer holidays in southern Africa are currently underway so a large influx of tourists was expected. Travel bans and talks of any forms of lockdown will negatively affect the markets that we’re looking forward to opening their doors to holiday goers. This is notable for those who have financial investments in or related to some of these countries.

Pharmaceutical companies, such as Pfizer, saw their stocks soar, over the last year, but there has been a bit of a wobble now with health officials being unsure of the vaccine’s effectiveness on the new strain. Before the rollout of the booster shot, and while we are still waiting to see how the virus will affect us, it may be worth considering investing in some pharmaceutical stocks – but your decision should be well-researched beforehand.

Overall it has proved to be a good choice for those who have already invested because Pfizer, specifically, has a Relative Strength Rating of 90/99. The RS Rating measures the stock’s performance over a year and determines how strongly or weakly the stock performed over that period. Its EPS Rating, used to measure how profitable a stock currently is, also rates high with an 80/99.

It is clear that the announcement of Omicron has caused a disturbance in the market but this is not the only factor affecting current trends. Supply-chain issues and labour shortages are also causing stock fluctuations. We may be able to report current market trends but further information is needed in order to make wise and worthwhile investments. That being said, be cautious of how Covid-19 is affecting your current share portfolio.