Stock prices fell across the world ahead of Mr Powell’s testimony as investors struggled to understand the danger posed by the Omicron variant, which began to shake markets last week. The Stoxx Europe 600 closed 0.9 percent; in Asia, the Nikkei 225 in Japan and the Hang Seng in Hong Kong each lost more than 1.5 percent.
Concerns about possible economic damage from the variant, such as travel restrictions, pushed crude oil prices down again on Tuesday. The futures prices for American benchmark crude oil slumped by more than 4 percent and have fallen by around 20 percent since the beginning of November.
Taken at face value, such a sell-off means that investors are seeing growing risks that the Omicron variant will trigger a global economic slowdown. However, some investors believe that prices are likely to reverse.
“Is there really a reason oil traded as low as $ 66 a barrel when we were north of $ 80? Are we literally closing off the entire global economy? ”Said Jack Janasiewicz, portfolio manager at Natixis Investment Managers. “This is an overreaction.”
Understand the supply chain crisis
Investors are still particularly focused on the effectiveness of vaccines against it. The managing director of Moderna, a vaccine manufacturer, said in an interview on Tuesday that there could be a “material decline” in the effectiveness of current vaccines against the new variant. The executive, Stéphane Bancel, said Die Financial Times that it could be months before an Omicron-specific vaccine could be manufactured on a large scale, adding that it would be risky to relocate all of the company’s vaccine production while other variants are still widely available.
Financial markets have been unstable since the Omicron variant was identified in southern Africa late last week. the The S&P 500 had its worst day since February on Friday by 2.3 percent. It is on monday began to recover Politicians around the world warned of panic, but Tuesday’s decline more than canceled those gains.
Despite the volatility of the past few days, investors are still looking for solid earnings this year. The S&P 500 is up more than 21 percent in 2021 – and that could be one reason the sell-off worsens next month as investors seek to hold profits for the year amid mounting concerns about the future.