By Anisha Sircar
(Reuters) – European shares fell on Thursday, tracking a slide in U.S. equities overnight due to fears around the Omicron coronavirus variant and the possibility of sooner-than-expected interest rate hikes.
The continent-wide STOXX 600 was down 0.9% in morning trade, after falling as much as 1.3% in the session.
The move marks a sharp reversal of gains on Wednesday, when a recovery in the pandemic-exposed sectors triggered the STOXX 600’s best session in almost six months.
Europe’s equity benchmark has seen sharp fluctuations in recent days on uncertainties about how contagious and severe the new variant is, and the effectiveness of current vaccines in tackling it.
“We’re going to stay in this pattern of up one day and down the next as long as the Omicron story remains an unknown,” said David Madden, market analyst at Equiti Capital.
“We won’t be re-testing Europe’s November highs until we’re certain about the variant’s knock-on effects, and until we know for sure whether we’re going down the road of lockdowns.”
Wall Street was roiled by a late selloff on Wednesday after the confirmation of the first U.S. case of Omicron infection and Federal Reserve Chair Jerome Powell raising a possibility that inflation may not recede in the second half of next year. [.N]
“There has been a knee-jerk reaction to the new variant being detected in the United States, but this selloff isn’t going to last too long, as people will realize that it may not pose much of a problem to the U.S. recovery,” Madden said.
Indeed, U.S. futures pointed to a near 1% gains for the S&P 500.
In Europe, tech stocks were the biggest decliners on the index, with semiconductor companies Infineon Technologies, AMS and ASML down between 2.3% and 4.3% on a report that Apple warned of slowing demand for iPhone 13.
Luxury goods firms Hermes and Richemont fell 2.4% and 1.2%, respectively, despite their inclusion in the blue-chip Euro STOXX 50 index.
Vifor Pharma surged 15.9% to the top of Swiss mid-cap index after media reports that Australian biotech firm CSL is in talks to buy the drugmaker.
(Reporting by Anisha Sircar in Bengaluru; Editing by Shinjini Ganguli)
