The Omicron uncertainty: 3 markets to watch as new strain stokes volatility

The new Omicron Covid-19 variant has caused a major spike in market volatility, as investors fear the potential of another major hit to growth because of the pandemic. Many questions remain unanswered right now, with the overarching concern the virus may have mutated to become possibly more infectious, and virus resistant. Here we look at three major markets and the way they’ve reacted in response to Omicron.

NASDAQ looks at deeper reversal as head-and-shoulder pattern forms

Equities across the globe have tumbled in recent days, as fears about the economic impact of Omicron persist. The situation was inflamed last night too, after US Federal Reserve Chairperson Jay Powell, in testimony before US Congress, showed a change in attitude towards inflation and future policy, as market participants speculate the Fed is laying the groundwork for a quicker tapering process. The US Tech 100 is looking quite vulnerable from a technical standpoint now. A head-and-shoulders patter – a very typical sign of reversal – is being carved out on the charts, suggesting a deeper drop for the index is on the cards. A break of the neckline at around 15,900 could open a test of support at September’s opening highs at around 15,700. A break back above the left and right should at 16,400 might negate this set-up.

Oil prices plunge ahead of fresh travel restrictions and lockdowns globally

Fresh lockdowns and travel restrictions in some parts of the globe has weighed on oil prices lately, which had already been dragged from its highs after the US and other major energy consuming nations dug into strategic reserves to lower prices and contain inflation pressures. All of the sudden, oil prices look vulnerable of a deeper pullback as traders’ price in the risks and potential hit to global growth from Omicron, as focus shifts to OPEC+’s meeting this week, for signals that the cartel may look to support prices by tightening output. Technical support for WTI Crude currently sits around US$65, which if broken, would open a drop towards support at $61 per barrel. Resistance in the meantime is around $70, which if broken above, perhaps off the back of this OPEC+ JMMC meeting, might open a run back above $74.

Moderna shares drop as CEO cast doubt about vaccine effectiveness

Shares of Moderna have traded in a volatile fashion in recent weeks, as resurgent Covid-19 cases in the Northern Hemisphere and the new Omicron variant raise questions about vaccine demand and efficiency in the face of the new strain. Moderna shares took a dive to start the week, after the company’s CEO suggested its existing vaccine was unlikely to provide adequate protection against the Omicron variant. After a break above the level, MRNA shares have fallen back below support/resistance at $354, as pullback towards $320 appears on the cards.