Global markets steadied on Monday, with U.S. stocks and oil prices gaining, as investors contemplated more carefully the knowns and unknowns of a new Covid-19 variant.
The S&P 500 rose about 1 percent, rebounding from a 2.3 percent drop on Friday, its worst day since February.
Stocks had dropped heavily on Friday after initial news of the discovery in southern Africa of the new variant, called Omicron.
The World Health Organization labeled it a “variant of concern,” its most serious category. Shares of companies in industries that had been bouncing back in recent months, like airlines and other travel firms, took big hits as governments reintroduced limits on movement across borders. Oil prices plunged on concerns about the economic toll of potential restrictions, while government bond yields fell amid an investor flight to the relative safety of sovereign debt.
On Monday, with quick answers about the threat from Omicron hard to come by, investors seemed to focus on the possibilities other than disaster and some of Friday’s moves were undone. While the new variant might turn out to be more contagious and vaccine resistant, it could also prove to be less dangerous to the health of the vaccinated or previously infected.
Scientists haven’t come to firm conclusions and it could take up to two weeks before the tests of current vaccines on the new variant have results. And, Covid-related stock market drops are getting milder and shorter.
When the virus first emerged in early 2020 the S&P 500 fell for a month and a half before recovering. In October 2020, a resurgence of cases led to a drop of 5.6 percent over a few days, but markets had rebounded within a week. In July of this year, the emergence of the Delta variant triggered a one-day slide of 1.6 percent that was recouped within a few days.
“We don’t know how dangerous it is to health, though early reports that it isn’t very dangerous, while downplayed by the cautious experts, are very seductive,” Kit Juckes, a strategist at Société Générale, wrote in a note to clients. “Against that backdrop, some of Friday’s madness has been reversed, but only part of it.”
Stocks in Europe also rose on Monday, with the Stoxx Europe 600 up 0.9 percent. The FTSE 100 in Britain rose more than 1 percent, while stock indexes in France and Spain were also higher.
Futures of the two major oil benchmarks, Brent crude and West Texas Intermediate, gained 3.8 percent and 2.9 percent. With crude oil rebounding, shares of energy companies also climbed. Enphase Energy was up 2.6 percent, while Diamondback Energy gained 1.2 percent.
Government bond yields also climbed. The yield on 10-year Treasury notes rose 5 basis points, or 0.05 percentage point, to 1.52 percent. On Friday, the yield had dropped 16 basis points, the steepest one-day fall since late March 2020.
Shares of companies that could profit from renewed interest in vaccines and other Covid treatments rallied. Vaccine maker Moderna gained more than 9 percent, while the U.S.-listed shares of BioNTech, which developed a vaccine with Pfizer, climbed about 4 percent.
Still, the concern did continue to linger in some corners of the market. As governments continued to impose restrictions on cross-border travel, travel and leisure stocks were among the worst performers in the S&P 500. Wynn Resorts fell 2.6 percent on Monday, while Host Hotels & Resorts was down 1.5 percent. Shares of American Airlines and United Airlines also fell.
With Japan sealing its borders, just days after reopening to short-term business travelers and international students, shares in Asia also tumbled. The Nikkei 225 fell 1.6 percent, while stocks in Hong Kong fell 1 percent.
Carlos Tejada and Stephen Gandel contributed reporting.
Although there is a lot we don’t know about the Omicron variant, business leaders are wearily asking themselves the same questions they did during previous surges of the coronavirus, the DealBook newsletter reports.
Will there be new lockdowns or vaccine mandates? Some jumped on the Omicron variant as an opportunity to urge airlines to require proof of vaccination and testing for passengers. The variant could also put pressure on companies reluctant to impose vaccine mandates on employees. As for government measures, Dr. Anthony Fauci told ABC News it was “too early to say” whether there needed to be new lockdowns or mandates.
What does this mean for conferences and in-person gatherings? There’s a full lineup of events this winter, with organizers hoping to get back on track after previous cancellations and postponements. In early January, CES is scheduled to return to Las Vegas in-person, while the World Economic Forum in Davos is set to take place in person later that month. The Beijing Winter Olympics in February will allow spectators, though only from mainland China. South by Southwest in Austin, Texas, is set to return in-person in March. In Britain, new rules come into effect on Tuesday that require all travelers to isolate on arrival until they receive a negative test result; similar policies elsewhere would make attending conferences and other gatherings more difficult, a potential setback for airlines that were just starting to see a rebound.
Are workers ever going back to the office? Beyond the immediate question about office holiday parties, there’s the bigger question about the fate of offices next year and beyond. Many companies have already set and delayed their return dates multiple times. Several, including Wells Fargo, Google and Facebook parent Meta, are planning to bring their workers back to the office in January. Will they postpone a return date again or simply order workers back? Is the prospect of a prolonged pandemic enough to persuade some companies to switch to a permanent form of flexibility or will they continue to muddle through with imperfect hybrid setups?
For months, airline travel has been steadily rebounding. But the discovery of the Omicron coronavirus variant threatens to derail the industry’s recovery, as the Delta variant did this summer.
Several nations, including the United States, have barred visitors from South Africa and a handful of neighboring countries. Japan, Morocco and Israel have barred all incoming foreign visitors, while the Philippines has banned visitors from southern Africa and several European countries.
The tightening of restrictions has drawn criticism from the travel sector. In a statement last week, Willie Walsh, the head of the International Air Transport Association, a global trade association, called for “safe alternatives to border closures and quarantine.” Over the weekend, the U.S. Travel Association urged the Biden administration to rethink its ban.
“Covid variants are of concern, but closed borders have not prevented their presence in the United States while vaccinations have proven incredibly durable,” Tori Emerson Barnes, executive vice president for public affairs and policy, said in a statement. “With a vaccine and testing requirement in place to enter the U.S., we continue to believe that assessing an individual’s risk and health status is the best way to welcome qualified global travelers into the United States.”
For U.S. airlines, the rebound in international travel has been slower than that for travel within the United States. But President Biden’s decision to ease longstanding restrictions on foreign travelers this month promised to stimulate that recovery. It isn’t yet clear whether or how the Omicron variant will affect travel demand, but if travel bans proliferate and concerns over the variant continue to spread, hopes for an accelerated international rebound could be dashed again.
Only two U.S. carriers, Delta Air Lines and United Airlines, fly out of southern Africa. Both have said that they are not yet planning to adjust their schedules in response to the administration’s ban, which took effect on Monday and does not apply to American citizens or lawful permanent residents. Delta operates three weekly flights between Atlanta and Johannesburg. United operates five flights a week between Newark and Johannesburg, and it has not changed its plans to restart flights between Newark and Cape Town on Wednesday.
No major American airline has announced any substantive changes to procedures because of the variant. And all passengers flying into the United States must provide proof of a negative coronavirus test, with noncitizens also required to be fully vaccinated.
Within the United States, air travel has nearly recovered, even with many businesses still wary of sending employees on work trips. The number of people screened at airport security checkpoints over the past week was down only 12 percent from the same week in 2019, according to the Transportation Security Administration. Sunday was the busiest travel day at airports since February 2020.
The industry easily handled the crush of travelers over the holiday week, avoiding the disruptions that lasted for days at some airlines in recent months. In the seven days ending Sunday, there were fewer than 600 cancellations, accounting for less than 0.5 percent of all scheduled domestic flights, according to FlightAware, an aviation data provider.
Hoping to alleviate long lines at gas stations, empty shelves in grocery stores and a Christmas without mince pies, the United Kingdom’s Department for Transport began to recruit truck drivers overseas in October.
Official figures have not been released, but in mid-October, Oliver Dowden, a co-chairman of the Conservative Party, said on a radio show that a “relatively limited” number of applications had been received, and a little more than 20 had been approved.
So rather than a source of instant relief, the visa offer has become an informal measure of the appeal of post-Brexit, late-pandemic Britain, David Segal reports for The New York Times.
Some drivers who have worked in Britain said the country had become more xenophobic since Brexit, which took effect in January 2020. The campaign to leave the European Union was championed loudest by the United Kingdom Independence Party, whose leader, Nigel Farage, pushed for a law that would ensure “British jobs for British workers.” In 2013, he warned of a “Romanian crime wave.”
The British government estimates that it needs 100,000 more drivers. This raises the question of why the Department for Transport has made a mere 5,000 temporary visas available. In Parliament, politicians from opposition parties contend that the low figure reflects ambivalence in the Conservative government. READ THE ARTICLE →
Solar panels and electric car batteries rely on cobalt, a metal abundant in the Democratic Republic of Congo and rare elsewhere. The United States had long recognized the Central African nation’s strategic importance, yet recent administrations have done little to maintain ties, leaving China to step in.
A New York Times investigation, “Race to the Future,” examines the global demand for raw materials as the clean energy revolution takes off. Places like the Democratic Republic of Congo, which produces two-thirds of the world’s supply of cobalt, are stepping into the kinds of roles once played by Saudi Arabia and other oil-rich nations. The race to secure supplies could have far-reaching implications for the shared goal of protecting the planet.
Read the investigation:
Global Rivalries: The competition for cobalt, used in electric cars, has set off a power struggle between China and the United States in Congo.
How the U.S. Lost Ground to China: Americans failed to safeguard decades of investments in Congo, essentially surrendering resources to China.
Key Takeaways: The Times dispatched reporters across three continents drawn into the fight. Here are some findings from their investigation.
Hunter Biden’s Business Ties: A firm co-founded by the president’s son facilitated the sale of a cobalt mine in Congo to a Chinese company. Here are the deal’s details.
How Electric Car Batteries Are Made: It all starts with prized minerals and metals like cobalt.
Labor market snapshot: On Friday, the Labor Department will release its report on jobs in November. The most recent report showed that the economy added more than 500,000 jobs in October after months of disappointing job figures. Still, 4.2 million fewer Americans were working in October than before pandemic lockdowns.
Theranos trial: Elizabeth Holmes, the founder of the blood testing start-up Theranos, will continue to testify as she defends herself against fraud charges. In three days of testimony last week, she painted herself as someone whose best intentions were misinterpreted.
Cyber Monday and Giving Tuesday: Americans returned to in-person shopping with gusto on Black Friday. But as Wirecutter notes, many shopping deals will extend through today, known as Cyber Monday. And for those who are more inclined to spend on charitable causes, there’s Giving Tuesday.