European Stocks Close On Weak Note On Virus Concerns

Despite staging a fairly strong recovery from lower levels, European stocks closed on a weak note on Tuesday as worries about the new coronavirus variant Omicron rendered the mood quite bearish.

Markets had recovered well on Monday, bouncing back from a severe setback in the previous session, as concerns about the new virus variant faded a bit. However, the markets went into a selling mode following Moderna’s CEO Stephane Bancel expressing apprehensions about the effectiveness of existing vaccines against the newly identified Omicron variant.

Markets also reacted to U.S. Fed chief Jerome Powell’s comments that indicated the central bank could hasten a tightening of monetary policy.

Powell told the Senate Committee that he thinks reducing the pace of monthly bond buys can move more quickly than the $15 billion a month schedule announced earlier this month.

A recovery past mid-afternoon resulted in stocks wiping off some of their losses.

Bancel said in an interview to the Financial Times that it will take a couple of weeks to determine how much the mutations have affected the efficacy of the vaccines currently available in the market.

“Depending on how much it dropped, we might decide on the one hand to give a higher dose of the current vaccine around the world to protect people. Maybe people at very high risk, the immunocompromised, and the elderly should need a fourth dose,” he said.

The pan European Stoxx 600 ended down 0.92%. The U.K.’s FTSE 100 ended lower by 0.71%. Germany’s DAX and France’s CAC 40 declined 1.18% and 0.81%, respectively. Switzerland’s SMI shed 0.5%.

Among other markets in Europe, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Portugal, Spain and Sweden ended notably lower.

Austria, Poland and Russia moved higher, while Iceland and Turkey settled flat.

In the UK market, London Stock Exchange declined more than 5%. Sainsbury (J), Entain, Compass Group, Pearson, IHG, Land Securities, BT Group, Kingfisher, ICP, Smith (DS), Intertek Group, British Land Co and Schrodders shed 2 to 4.5%.

Anglo American Plc, BHP Group, Polymetal International, Aviva, Taylor Wimpey and Natwest Group gained 1 to 3.3%.

In the French market, Danone, Carrefour, Technip, Unibail Rodamco, Air France-KLM, Safran, WorldLine, ArcelorMittal and Sanofi lost 2 to 4.2%. Pernod Ricard, Essilor and Publicis Groupe a;sp emded notably lower.

Valeo gained nearly 4%. Schneider Electric climbed 3.3%, while Faurecia, Michelin, Teleperformance and Atos gained 1 to 2%.

In Germany, HelloFresh declined more than 5%. Deutsche Wohnen, SAP, Deutsche Telekom, RWE, SIemens, Henkel, Bayer, Volkswagen, Covestro and MTU Aero Engines lost 1.4 to 3.2%.

Sartorius surged up more than 5%. Continental gained about 1.6%.

In economic news, flash estimate from Eurostat showed Eurozone inflation accelerated more than expected in November on energy prices.

Annual inflation advanced to 4.9% in November from 4.1% in October, and higher than the expected level of 4.5%, the data showed. Core inflation that excludes energy, food, alcohol and tobacco, increased to 2.6% from 2% in October. Core inflation was forecast to advance to 2.3%.

Data released by Destatis showed that Germany’s jobless rate held steady at seasonally adjusted 3.3% in October. The number of unemployed totaled 1.40 million, which was a decline of 17,700 or 1.2% from the previous month.

On an unadjusted basis, unemployment fell by 305,000 or 18.9% from the last year to 1.31 million.

Meanwhile, data published by the Federal Labor Agency revealed Germany’s unemployment declined more than expected in November, falling to 5.3% in the month from 5.4% in October.