You are here: Home - Investing - Experienced Investor - News -

Does Omicron pose a threat to stock market stability?

0
Written by: Emma Lunn
06/12/2021
Two-thirds of financial advisers say ongoing Covid uncertainty will be the biggest financial risk in 2022.

As part of its 2022 Global Outlook event, Quilter Investors surveyed nearly 300 financial advisers and found two-thirds (66%) saw new variants and the speed of global vaccination campaigns as the biggest concern for markets in the new year.

A further 19% saw the biggest risk to be higher than expected inflation, while about one in eight (12%) were most concerned about strong economic growth failing to materialise or being very short lived.

With the prospect on interest rate rises on the cards and inflation looking to be more than transitory, just 4% believed a central bank policy error was the biggest risk.

Stock markets across the world slumped when Omicron was identified as a variant of concern on 26 November.

The FTSE 100 suffered its worst session in more than a year declining 3.6% as news of the latest variant hit equity markets. In the US, the S&P 500 Index declined 2.4% – its worst day since February 2021. Meanwhile, in Europe, the STOXX 50 Index fared even worse with a fall of almost 4% making it the worst day of 2021 so far for the index.

However, Quilter Investors is urging advisers and investors not to overreact to the new variant and the reintroduction of some health and social restrictions.

Danny Knight, head of investment directors at Quilter Investors, said: “While Covid is always going to be a concern while it is prevalent, Friday’s volatility and Monday’s quick recovery show that investors are increasingly coming to terms with life in the post-pandemic era. Indeed, the volatility witnessed is nothing compared to what we saw in 2020 and investors are becoming increasingly less concerned as to news of the next stage of the coronavirus’ life cycle.

“This suggests that more fundamental market drivers such as company earnings, investor sentiment and the outlook for inflation and interest rates will play a far greater part in deciding how markets perform in the year ahead than the latest discoveries about the coronavirus and its variants.

“It could be argued the recovery has never looked so uncertain and as such diversification is going to play a crucial role. Rather than Big Tech driving market gains, we are likely to see a broadening of returns and companies doing the heavy lifting. This will, however, require active decision making to harness these opportunities and is something advisers need to bear in mind as the year progresses.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week