Global stocks and oil prices fell on Tuesday, as investors placed money in high-quality government bonds, with trade dominated by concerns over the Omicron coronavirus variant.

The Wall Street S&P 500 stock index, which rallied on Monday to reflect renewed optimism that market volatility triggered by Omicron would prove to be a buying opportunity, opened 0.7% of less.

The European Stoxx 600 index was down 0.5% by mid-afternoon in London, after a choppy trading day marked by concerns over the potential of the new variant to evade vaccines. Hong Kong’s Hang Seng Index and Tokyo’s Nikkei 225 both lost 1.6%.

The measures came after Stéphane Bancel, chief executive of vaccine maker Moderna, used an interview with the Financial Times to predict that existing vaccines would be much less effective in fighting Omicron than earlier strains of coronavirus. He also warned that pharmaceutical companies would take months to make new jabs specific to a large-scale variant.

Brent crude, the international benchmark for oil, fell 3.7% to $ 70.76 per barrel, about a three-month low.

Investors expect markets to remain volatile as information emerges about Omicron and the ability of existing governments and immunization programs to contain it.

“I suspect that for the next few weeks the markets are going to revolve around Omicron,” said Patrick Spencer, vice president of equities at RW Baird.

“We all fly blindly on the data,” he added, referring to scientists’ uncertainty about the impact of the new variant, which has an unusual genetic profile.

Wall Street’s Vix Index, a measure of expected stock market volatility, rose to 25 on Tuesday from 23 in the previous session, more than its long-term average of 20.

U.S. tech stocks outperformed others, with Wall Street’s Nasdaq Composite falling 0.3% in early trades, as investors reflected on previous coronavirus lockdowns boosting home entertainment and remote working .

The yield on the 10-year Treasury bill fell 0.1 percentage point to 1.44%, reflecting a sharp rise in the price of the benchmark government debt instrument.

The dollar index, which measures the US currency against six others, fell 0.7% as traders expected the Federal Reserve to be reluctant to raise interest rates from record highs .

Although the United States has not detected any Omicron cases so far, President Joe Biden predicted it would emerge there.

“The scale of market reaction could increase further if we start to see cases of this variant in the United States,” said Tancredi Cordero, founder and managing director of investment advisory boutique Kuros Associates.

“The markets entered this situation out of complacency,” he added, noting that the S&P 500 and the Stoxx had reached record highs earlier this month despite high global inflation and that the Fed announced the start of cuts to its $ 120 billion per month. stimulus.

In remarks prepared ahead of a Congressional hearing later Tuesday, Fed Chairman Jay Powell said the increase in Covid-19 and Omicron cases “pose downside risks to jobs and the economic activity and increased uncertainty for inflation “.

Oil prices, which fell more than 10 percent on Friday, “won’t regain all the lost ground until after the end of this year,” said Tamas Varga of oil broker PVM.

“It will take time to assess the damage caused by the rise of the latest variant of the virus. ”

Additional reporting by Neil Hume in London