Equity markets were back on track yesterday, since the Nasdaq, rich in technology stocks, erased Friday's losses. Nobody knows yet the exact characteristics of the Omicron variant, but it is certain that we have entered a phase during which the media will relay the appearance of one case here, several others there. And if Omicron is as easily transmissible as feared, this kind of information is going to multiply in the days to come and make the general anxiety rise, starting with restaurant and leisure professionals. Some South Africa reports talk about milder symptoms, but most epidemiologist say it is way too early to draw any conclusions on the severity of the variant.

There is also a debate at the level of the central banks. The head of the US Federal Reserve, Jerome Powell, took advantage of a hearing before the US Congress yesterday to link the resurgence of coronavirus - not only the appearance of the Omicron variant - to inflationary risk. "Heightened fears about the virus could help deter some people from traveling to work, slowing progress in the labor market and increasing disruptions to supply chains," Powell explained. Naturally, the Fed is also monitoring health developments.

Markets looked like they were headed for a moderately bearish opening, when the Financial Times published an interview with Moderna’s CEO. "I think the drop [in efficacy] will be significant. I don't know yet by how much, because we have to wait for the data. But every scientist I've talked to ... says it's not going to be good," he said. Futures on the three major Wall Street indexes were down between 0.3 and 0.9% in pre-market trading.

However, Scott Gottlieb, a director of Pfizer and former commissioner of the US Food and Drug Administration, told CNBC: “There’s a reasonable degree of confidence in vaccine circles that [with] at least three doses . . . the patient is going to have fairly good protection against this variant.”

But since M. Bancel reiterated in the interview that it will take several months to produce a specific vaccine on a large scale, tensions rose this morning and leading indicators turned bright red. In Asia, the rebound in major markets went to an abrupt end.

Before the Bancel episode, some positive macroeconomic news had fueled some optimism. China's official PMI, which measures purchasing managers' confidence, moved back into the expansion zone for manufacturing, although economists were not expecting so much. The non-manufacturing version is holding up well. Positive statistics, therefore, which tend to show that the world's second largest economy is back on track after the turmoil in the real estate market and the energy supply problems of the electro-intensive industries.


Economic highlights of the day:

European inflation for November, the FHFA house price index, the Chicago PMI and the Conference Board consumer confidence index are released today.

The euro is back up to EUR 0.8797. The ounce of gold is languishing at USD 1,795, while oil is down to USD 70.15 per barrel of Brent and around USD 67.00 per barrel of WTI. US 10-year debt is dropping 1.50% (-2 points). Bitcoin rises towards USD 58,500


On markets:

Moderna CEO Stephane Bancel said Tuesday that currently available COVID-19 vaccines are unlikely to be as effective against the Omicron variant as they have been against previous strains of the SARS-CoV-2 coronavirus. The stock is down 5.5% in pre-market trading.

* Regeneron announced Tuesday that its cocktail of antibodies against COVID-19 and other similar treatments may be less effective against the Omicron variant. The stock is down 2.7% in pre-market trading.

* Pfizer, BioNTech - The two companies are expected to ask the U.S. Food and Drug Administration in the next few days to allow a booster dose of their COVID-19 vaccine for 16- to 17-year-olds, the Washington Post reported Monday, citing sources.

* Occidental Petroleum, down 3.8% in pre-market trading, posted one of the biggest losses among energy groups as oil prices fell amid doubts about global demand.

* The Competition and Markets Authority (CMA), the British competition authority, asked Meta, Facebook's parent company on Tuesday to divest the Giphy animated image platform, saying the deal signed between the two companies could hurt social network users and advertisers. Meta shares are down 0.8% in pre-market trading.

* Twitter is down another 0.7 percent to $45.46 in premarket trading, heading for a 10-month low at the open, a day after it was announced that founder Jack Dorsey will be replaced as CEO by Parag Agrawal, the social network's current chief technology officer.

* Tesla - Elon Musk, the car company's chief executive, highlighted on Monday the difficulties encountered in the supply chain to produce its Cybertruck, an electric pickup truck unveiled in 2019 and for which Tesla says it has received several hundred thousand orders. The stock is losing 0.7% in pre-market trading.

* UnitedHealthGroup on Monday forecast 2022 earnings below Wall Street analysts' consensus due to higher reimbursements to its policyholders amid the COVID-19 pandemic.

* Elanco Animal Health announced Tuesday it will cut 380 jobs worldwide as part of a restructuring that began after it bought Bayer's veterinary drug unit last year for $6.89 billion (6.07 billion euros).


Analyst recommendations:

  • AutoDesk: Berenberg adjusts PT to $360 from $400, Keeps Buy Rating
  • Best Buy Co.: Wolfe drops coverage, last rated Outperform
  • Beyond Meat: HSBC initiated coverage with a recommendation of reduce. PT down 17% to $62
  • Blackstone Mortgage Trust: Keefe Bruyette & Woods upgrades to Outperform from Market Perform, keeps $34 Price Target
  • Booking Holdings: DA Davidson adjusts price target to $2,300 from $1,550, maintains neutral rating
  • Coca-Cola HBC: J.P. Morgan upgrades from neutral to overweight targeting GBp 3100.
  • Electrocomponents: Berenberg remains a hold with a price target raised from GBp 890 to GBp 1230.
  • GB Group: Stifel raised the recommendation to buy from hold. PT up 20% to 950 pence
  • Merck & Co.: SVB Leerink adjusts price target to $102 from $105, keeps outperform rating
  • NVidia Corporation: First Shanghai upgrades to Buy from Hold, lifts PT to $380 from $230
  • Pfizer: JP Morgan gives the stock a Neutral rating. The target price has been revised upwards and is now set at USD 53, compared with USD 42 previously.
  • Serco: Jefferies remains Buy with a price target raised from GBp 170 to 185.
  • Truist Financial Corporation: Goldman Sachs adjusts price target to $73 from $70, keeps buy rating
  • Wec Energy: BMO Capital Markets reinstated coverage with a recommendation of market perform. PT up 1.7% to $92
  • Wizz Air: HSBC raised the recommendation to hold from reduce. PT down 7.6% to 3,634 pence