EMERGENCE OF OMICRON HIGHLIGHTS THE BENEFITS OF DIVERSIFICATION
The emergence of Omicron has brought down fears of Covid given the first signs that the new variant may be more effective at evading vaccines. The research is expected to provide more clarity on these questions during the month of December. Early comments from Moderna and BioNtech suggest that Omicron may evade protection against infections to a greater extent, but they suspect that vaccines continue to protect against serious illness. Unsurprisingly, this has sped up vaccine recall campaigns across Europe.
A little patience is therefore required to be able to assess Omicron and its potential economic consequences. This will then shape the reaction of central banks.
Markets responded with a massive sell off when Omicron emerged: The S&P 500 fell 2.3% and bond prices rose (and yields fell) and uncertainty is likely to continue, as Monique Wong explains. , Executive Director of Asset Management at Coutts, “Following the initial market response to the emergence of Omicron, there will always be a period of uncertainty during which the market may overreact to negative news. , even positive.
We advise against big changes in investing and instead emphasize the benefits of portfolio diversification like bonds or defensive stocks like healthcare. At Coutts, we have slightly reduced exposure to European equities and increased liquidity in portfolios while keeping a close eye on developments.