European Stocks Drifting Lower On Virus Jitters

European stocks are drifting lower on Tuesday, weighed down by concerns about the effectiveness of existing Covid-19 vaccines against the newly detected Omicron variant.

European markets had turned positive on Monday, rebounding from steep losses a session earlier, as worries about the new variant faded somewhat. However, the mood in the markets is quite bearish today after Moderna CEO said in an interview that Covid-19 vaccines are likely to be less effective against Omicron.

Sharply lower U.S. stock futures and weak crude oil prices contribute as well the negative sentiment in European markets. Investors are also digesting the latest batch of economic data from the region.

Moderna CEO Stephane 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 is declining 1.42%, the U.K.’s FTSR 100 is down 1.2%, Germany’s DAX is down 1.6% and France’s CAC 40 is drifting down 1.45%, while Switzerland’s SMI is sliding nearly 1%.

In the UK market, Melrose Industries, British Land Co, BT Group, IAG, Schrodders, Royal Dutch Shell, Coca-Cola HBC, Rolls-Royce Holdings and BP are down 2 to 4%.

Polymetal International, Evraz, Aviva, Darktrace and Anglo American Plc are up with moderate gains.

In the French market, Safran, Technip, Air France-KLM, Essilor, Faurecia, LVMH, Capgemini, ArcelorMittal, Sanofi, BNP Paribas, Credit Agricole, Publicis Groupe, Renault and Michelin are down 1 to 3%.

In Germany, Volkswagen is declining more than 2.5%. Siemens, HeidelbergCement, Deutsche Telekom, SAP, Bayer, Fresenius Medical Care, Airbus and Deutsche Post are down 1.6 to 2%.

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.