Omicron puts market on edge

MANILA, Philippines — COVID-19 has resurfaced as a worry for investors, and is a potential driver of big market moves after a new variant triggered alarm, long after the threat had receded in investors’ eyes.

Worries about a new strain of the virus, named Omicron and classified by the World Health Organization as a variant of concern, slammed markets worldwide last Friday. In the US, it dealt the S&P 500 index its biggest one-day percentage loss in nine months.

In the local market, the Philippine Stock Exchange  index (PSEi) would likely test its support levels  amid the Omicron headwinds, which is inducing uncertainties in investors.

In a commentary, UTrade said there is, however, continued support on the current progress of the country’s economic recovery trajectory.

Against this backdrop, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., sees immediate support at 7,200 to 7,210 versus any further healthy profit-taking in the near future.

Last week, the PSEi corrected lower by 2.13 percent week-on-week to close at 7,278.44.

Ricafort said market sentiment last week was partly supported by near record highs for most US stock markets amid stronger US economic data recently, such as the US initial jobless claims again at the lowest levels since 1969 and generally better corporate earnings.

2TradeAsia, for its part said, the return of the full-day trading week schedule should also help prop up the market.

The move “harkens back to pre-COVID days and is a soft reminder that the worst may have come to pass,” it said.

With little known about the new variant, investors said signs that the new strain is spreading and questions over its resistance to vaccines could weigh on the so-called reopening trade that has lifted markets at various times this year.