EUROPE MARKET ROUT CONTINIUES
European stock markets resumed their rout to multi-week lows on Tuesday, after pausing for breath in the previous session, as pandemic jitters related to the new omicron coronavirus variant returned to the front stage. Behind this comeback of pandemic woes are the latest statements of Moderna’s CEO to the Financial Times, warning that he expects a material drop in the effectiveness levels of existing vaccines because of the number of mutations on the spike protein, where current vaccines focus on. A new shot would take months to develop and ship, he added. On the earnings front, easyJet highlighted double-digit drops in FY21 operational and financial figures compared to FY20, namely in capacity and passengers flown, as well as total revenues (£1.5 billion vs £3 billion) and headline losses (£1.1 billion vs £0.8 billion), although noticed that revenues for the current 2H FY22 have surpassed FY19 levels. Other firms reporting today include Volvo, SAS, and Greencore.
The FTSE 100 shed 1% on Tuesday, near 2-month lows and in line with its European peers, amid reignited fears about the effectiveness of vaccines against the omicron coronavirus variant. Moderna’s CEO said to the Financial Times that he expects a material drop in the effectiveness levels of existing vaccines because of the number of mutations on the spike protein, where current vaccines focus on. A new shot would take months to develop and ship, he added. On the earnings front, easyJet highlighted significant deteriorations in operational and financial figures in FY21 compared to FY20, with double-digit drops in capacity, passengers flown, as well as total revenues (£1.5 billion vs £3 billion), and headline losses (£1.1 billion vs £0.8 billion), although noticed that revenues for the current 2H FY22 have surpassed FY19 levels.
The CAC 40 Index was 1.5% lower to trade around 6,690 on Tuesday, the lowest in 5 weeks, as pandemic jitters returned following increased uncertainty over the Omicron variant. Remarks from Moderna’s CEO stated that the biotech’s mRNA vaccine shall not be as effective for the Omicron variant as the Delta variant because of the higher amount of mutations in the virus’s spike proteins. Correspondingly, Valneva shares down 3.6%, as investors lost confidence that the firm’s new vaccine will be as effective as previously believed. A resurgence in the pandemic struggles makes it increasingly difficult to maintain the rhetoric that inflationary pressure in Europe is temporary, while preliminary data showed domestic inflation advanced to a 13-year high. On the corporate front, travel and lodging industries booked losses, driven by Air France-KLM (-4.1%), Airbus (-2.8%), and Accor (-2.8%).
The FTSE MIB declined 1.6% to trade at around 25,620 on Tuesday, in line with its European peers and the lowest in 8 weeks, as pandemic fears dragged equity markets lower. In an interview with the Financial Times, Moderna’s CEO stated that the company’s mRNA vaccine will not be as effective in combating the Omicron variant as it is with other variants due to the higher number of mutations in the Omicron’s spike proteins. The news comes as Italy already confirmed cases of the new variant on national soil, while the country is increasing restrictive measures against unvaccinated individuals to slow the incoming fourth wave. On the corporate front, the energy and industrial sectors led the losses, driven by Eni (-2.4%), Stellantis (-3.8%), and Cnh Inudstrial (-2.7%).
