Global stock markets and oil prices fell on Tuesday after vaccine maker Moderna warned that existing jabs may be less effective against the new omicron variant of Covid-19.
The company’s chief executive, Stéphane Bancel, predicted there would be a “material” drop in the effectiveness of vaccines and said it would take several months before pharmaceutical companies could produce an omicron-specific jab at scale.
“[Moderna] and Pfizer cannot get a billion doses next week. The maths doesn’t work. But could we get the billion doses out by the summer? Sure,” he told the Financial Times.
He added: “There is no world, I think, where [the effectiveness] is the same level … we had with delta.”
Mr Bancel’s tone contrasted with more positive statements from fellow vaccine manufacturers Pfizer and BioNTech, who said on Friday that they could ship a new vaccine within 100 days.
AstraZeneca also issued a statement reiterating that existing vaccines “provide very high levels of protection against severe disease and there is no evidence so far that omicron is any different”.
However, that was not enough to calm markets, which remained volatile. “The oil price has fallen back, and gilt yields have dropped significantly, reflecting fears that omicron may spell trouble for the global economy,” said Laith Khalaf, head of investment analysis at AJ Bell, a stockbroking firm.
“Announcements from governments and pharma companies in the coming days and weeks will take centre stage in market pricing. Hopefully we will receive confirmation that our defences against the virus are still largely intact, but at the very least the omicron variant serves as a reminder that the economy is still vulnerable to curveballs launched by the pandemic.”
Governments around the world have begun to tighten restrictions, which are likely to hit some sectors harder than others, with airlines and hospitality bosses expressing concern.
EasyJet said on Tuesday it was already seeing some impact on demand as it revealed losses of more than £1.1bn. “However, we have prepared ourselves for periods of uncertainty such as this,” the airline said, adding that it was still “too soon” to say how omicron would impact European travel, or what restrictions might be brought in.
Despite the current uncertainty, easyJet said it was still hopeful of a recovery to pre-pandemic levels of trading over its current year. Johan Lundgren, easyJet’s chief executive, said that while “many uncertainties remain as we navigate the winter”, the company expected to bounce back.
“We’re seeing very strong demand into next summer,” Mr Lundgren said, “because there is very strong pent-up demand.”
Several countries including the US and UK have imposed tough restrictions on travel from southern African countries, where the new variant first emerged. Omicron is thought to be more transmissible than previous Covid variants, and contains a large number of mutations, which scientists believe may allow it to evade vaccines.
UK hospitality bosses welcomed the government’s decision not to impose mask-wearing in pubs, restaurants and nightclubs, a move that they argue would further damage businesses that have already been badly affected by the pandemic.
“It needs to be clear that the sector is still extremely fragile and will not survive further trade-inhibiting restrictions or a potential lockdown,” said Michael Kill, chief executive of the Night Time Industries Association (NTIA).
Current measures being taken by nightclubs had been “extremely effective”, he said. “Coupled with the vaccination programme, we must remain confident that we are in a stronger position to deal with variants than many other countries across the world.”
Pressure from public health experts and others is growing on ministers to announce mandatory mask-wearing in a wider range of settings, beyond public transport.
Fears for the wider economy sent the FTSE100 tumbling 1 per cent on Tuesday morning to trade at 7,021.75, while Wall Street was expected to open sharply lower. Oil prices plunged, with Brent crude down 3.2 per cent to $71 and West Texas Intermediate down 2.8 per cent at $68.
Asian stock markets were mixed as investors weighed up the latest news on omicron. Japan’s benchmark Nikkei 225 rose 1.0 per cent to 28,577.34 in morning trading. Australia’s S&P/ASX 200 gained 1.2 per cent to 7,325.00, South Korea’s Kospi lost 0.4 per cent to 2,898.40, and Hong Kong’s Hang Seng dipped 1.1 per cent to 23,580.13, while the Shanghai Composite added 0.3 per cent to 3,571.91.
Analysts expect economic uncertainty to ease in 2022 as antiviral drugs arrive on the market. “Looking into next year, the arrival of astonishingly effective antiviral treatments for Covid ... means that the disease will move into the endemic nuisance phase, which is very different from the pandemic panic phase,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.