European stocks fall amid omicron vaccine fears

LONDON — European stocks pulled back on Tuesday as new fears around the omicron Covid variant and vaccines weighed on global markets.

The pan-European Stoxx 600 fell 0.9% by mid-afternoon, recouping some of its earlier losses. Retail stocks shed 2.3% to lead losses as all sectors and major bourses slid into negative territory

U.S. stock futures also sharply reversed course after rising in overnight trading, while Asia-Pacific markets were mostly lower by Tuesday’s close as investors reassessed the risks associated with the new variant.

The reversal came after Moderna CEO Stephane Bancel told the Financial Times that he expects existing vaccines to be less effective against the new variant. Bancel told CNBC on Monday that it could take months to develop and ship an omicron-specific vaccine

He expressed some uncertainty about omicron, saying that will take at least two weeks to determine how much the mutations have affected the efficacy of the vaccines currently on the market

“Depending on how much it dropped, we might decide on the one hand to give a higher dose of the current vaccine around the world to protect people. Maybe people at very high risk, the immunocompromised, and the elderly should need a fourth dose,” he said

European and U.S. stocks had begun a tentative rebound on Monday following last Friday’s sell-off as concerns over the newly discovered omicron Covid variant appeared to ease

In the U.S., stocks got a big boost after U.S. President Joe Biden said lockdowns in response to the omicron variant are currently off the table and there will be no new travel restrictions

Covid symptoms linked to the omicron variant have been described as “extremely mild” by the South African doctor who first spotted the new strain. Nonetheless, the World Health Organization warned Monday that the omicron variant is likely to spread further and poses a “very high” global risk

Data released Tuesday showed Chinese factory activity unexpectedly growing in November, with China’s official manufacturing Purchasing Managers’ Index for November coming in at 50.1. That was above expectations by analysts in a Reuters poll for a reading of 49.6. PMI readings below 50 represent contraction while those above that level signify expansion

Stateside, investors are looking ahead to key economic data set to be released this week, including the November jobs report on Friday which is expected to show solid jobs growth. Economists surveyed by Dow Jones expect 581,000 jobs to have been added in November

Back in Europe, euro zone inflation surged to a record 4.9% annually in November, above consensus forecasts, with high energy prices adding heavily to the print

France’s final third-quarter gross domestic product growth was confirmed at 3% quarter on quarter, while inflation rose to an annual rate of 3.4% in November, its highest since September 2008