European stocks dip

European stocks fell on Thursday, following a drop on Wall Street late the previous session, as the new Omicron coronavirus variant fueled market volatility.

The Stoxx 600 in Europe fell 0.9% as traders reacted to the first discovery of the new strain in the United States on Wednesday and a continued rise in cases in South Africa. The FTSE 100 in London fell 0.6%, while the Dax in Germany fell 0.8%.

European equities and oil prices rose on Wednesday. This resulted in an early rebound on Wall Street as traders re-entered economically sensitive banking and industrial stocks that had fallen in the previous days. The S&P 500 equity index, on the other hand, closed 1.2 percent lower in New York. It marked its most significant intraday swing since March. Following a punishing session on Tuesday, it saw the index fall nearly 2%. Many investors were waiting for the disruptive variant, which has woken us up and refocused us on the virus.

Federal reserve yields

The Vix is Wall Street’s so-called fear gauge measures expected stock market volatility. On Thursday, it traded at a high of around 28, well above its long-run average of approximately 20. During the European morning, futures contracts tracking the S&P 500 were up 0.8%.

Markets have also been assessing comments made by Jay Powell, the US Federal Reserve chair, on Tuesday. He suggested he was willing to accelerate the central bank’s $120 billion monthly bond purchases, which have supported the stock market since March 2020.

Omicron, which the World Health Organization declared a “variant of concern” last week, has a high number of mutations, raising concerns that it could evade vaccine protection.

“Vaccines becoming wholly ineffective and the risk of other lockdowns is not our core scenario,” he added, “but the short-term risks to markets have increased.”

The yield on the benchmark 10-year Treasury note increased by 0.01 percentage point to around 1.45%. Brent crude, the oil benchmark, rose 2.2 percent to $70.32 per barrel after recent volatility.

Asian equities were mixed, with Hong Kong’s Hang Seng index rising 0.5% while Tokyo’s Nikkei 225 fell 0.7%.