At the start of the Christmas week, the color red dominates the financial markets. The European share index Euro Stoxx 50 started Monday with losses, and it also fell at the start of trading.
The Netherlands has been in a tough lockdown since Sunday, in Germany further contact restrictions seem only a matter of time. The UK and other European countries have once again been declared virus variant areas. In view of all this news, the mood among investors is not exactly festive, but rather depressed – and should remain so for the time being.
A country is infected
, warn virologists. A recent study by Imperial College in London also questioned whether the consequences of an Omicron infection are really milder than with previous virus variants such as Delta. In any case, the variant is so contagious that it could send a huge number of workers to sick beds at the same time. In industries that are already suffering from a lack of staff, it is possible that nothing will work at all. The prospect of massive staff shortages and further lockdowns is causing unrest in the markets. Not only have share prices fallen, the price of oil has also fallen. Investors obviously expect weaker demand.
The hoped-for year-end rally has been canceled for now. At the moment, not even the previous lockdown winners can score. HelloFresh,, Zalando: Nowhere is it going well. That shows how much optimism was already factored into the prices earlier in the year and how great the uncertainty among investors is now.
Investors are exhausted
The Omikron wave encounters an environment that is anything but well prepared. Despite falling incidences, clinics are still well filled with patients with the Delta variant of the virus, and the nursing staff is burned out. Even the financial markets are in no shape to simply put Omikron away like a cold. After almost two years of pandemic, investors are exhausted from constantly switching between hope and fear. The prices on many stock markets have been weakening for weeks. A sharp price slide caused by fear of new lockdowns can no longer be considered an overdue correction, but would hurt.
Hardly any support can be expected from the US stock exchanges. The US benchmark index 500 fell at the end of last week. In particular, cyclical stocks have lost value. This week also starts with bad omens: US President Joe Biden is under massive pressure. His party colleague Joe Manchin announced on Sunday that he would vote against Biden’s prestigious project: a legislative package that should free billions in investments for climate protection and social issues. After resistance from within its own ranks, it is questionable which plans Biden will get through in the future. This uncertainty could add further turmoil to Wall Street on top of concerns about the economy.
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Investors should think about taking a long hibernation now. In any case, selling stocks for fear of the omicron dip would not be a good idea. “In the past 25 years, investors who exited the market the day after a two percent decline in prices have rarely been rewarded,” says Seema Shah, chief strategist at the US fund company Principal Global Investors. In volatile markets in particular, there is a high risk of losing money with hasty exits and re-entries.
Because of a critical report by Fraser Perring, who became famous with anti-Wirecard betting, for example, the shares of the IT service provider S&T crashed.