Moderna CEO says vaccines likely no match for Omicron variant; stock markets sink on comment

Stephane Bancel's warning came as G7 health ministers held emergency talks on the new variant, which is spreading around the world and prompting nations to close their borders once again or impose fresh travel restrictions

FP Staff November 30, 2021 16:10:50 IST
Moderna CEO says vaccines likely no match for Omicron variant; stock markets sink on comment

Representational Image. AP

Existing COVID-19 jabs will struggle against the Omicron variant and it will take months to develop a new shot that works, the head of US vaccine manufacturer Moderna has told the Financial Times.

Stephane Bancel told the newspaper in an interview published Tuesday that data would be available on the effectiveness of current vaccines in the next two weeks but scientists were not optimistic.

"All the scientists I've talked to ... are like 'this is not going to be good'," he told the newspaper.

Bancel's warning came as G7 health ministers held emergency talks on the new variant, which is spreading around the world and prompting nations to close their borders once again or impose fresh travel restrictions.

The World Health Organisation has called the risk from Omicron "very high".

Bancel said researchers were concerned because 32 of 50 mutations found in the Omicron variant were on the spike protein, a part of the virus that vaccines use to bolster the immune system against Covid.

He told the FT there would be a "material drop" in the effectiveness of current jabs against Omicron.

Moderna has already said it is working on an Omicron-specific vaccine, as is US drugmaker Pfizer.

Chief executive Bancel said his company could deliver between two billion and three billion doses in 2022 but it would be dangerous to shift all production to an Omicron-specific shot with other strains of the virus still in circulation.

His more alarming tone contrasts with efforts by politicians to project calm regarding Omicron.

US president Joe Biden said Monday the strain was "not a cause for panic".

Markets hit by warning

Equities and oil sank again Tuesday after the head of Moderna warned current coronavirus vaccines might be less effective at fending off the Omicron variant, fuelling fears that countries could be forced back into economically painful lockdowns.

Stocks had mostly been edging up after a two-day sell-off that followed news Friday of the new variant, which some observers said was overdone as billions of people have been inoculated.

But Stephane Bancel's comments in an interview with the Financial Times sent shivers through markets again, as he said the high amount of mutations on Omicron and its swift spread in South Africa indicated the present jabs would need to be tweaked.

"There is no world, I think, where (the effectiveness) is the same level . . . we had with Delta," the Moderna CEO told the newspaper.

Tokyo, Hong Kong, Singapore, Bangkok and Jakarta all lost more than one percent while Seoul sank more than two percent.

London, Paris and Frankfurt opened in the red and futures in New York were also sharply lower.

Sydney, Wellington and Taipei closed higher before the interview was published.

The selling also spread to oil markets where both main contracts plunged more than three percent, after slowly recovering from Friday's collapse of more than 10 percent as demand fears came flooding back.

Tourism-linked firms were among the worst hit with Cathay Pacific losing more than four percent in Hong Kong, having already been impacted by new restrictions on travel to the city, and Singapore Airlines off more than one percent.

"Information on the Omicron variant is sketchy, how drastic its symptoms will be and how easily it can spread is also unknown, as is the effectiveness of current vaccines," said Kelvin Wong at CMC Markets.

"I expect more downside risk for the next couple of weeks unless there's more clarity on the Omicron strain."

Uncertainty

Bancel's remarks came after major firms said they were already working on a jab specific to the new strain.

Pfizer chief Albert Bourla said testing could show existing shots "protect less", which would mean "that we need to create a new vaccine" but added that he did not think the "result will be the vaccines don't protect".

There remains a lot of uncertainty among traders, and experts said it would take weeks before the full effects of the variant are known. The World Health Organization warned it poses a "very high" risk globally.

Investors have suffered a tough few months as they navigate the impact of surging inflation and the prospect of central banks withdrawing the ultra-loose monetary policies put in place at the start of the pandemic.

US Federal Reserve boss Jerome Powell warned the latest emergency posed "downside risks to employment and economic activity, and increased uncertainty for inflation".

In prepared comments ahead of an appearance in front of the Senate Banking Committee later Tuesday, he also said the virus could "intensify supply-chain disruptions" that have been a major cause of the inflation spike this year.

Oil traders kept tabs on OPEC and other key producers, who are due to decide on whether to press on with their plan to lift output each month in light of the new travel restrictions and the threat of Omicron.

The group had already been contemplating a pause after the United States and several other countries including China and Japan released some crude from their reserves to temper a price surge.

Carsten Fritsch of Commerzbank said "there is much to suggest that OPEC+ will not initially step up its oil production any further" in an effort to maintain current prices at around $70 a barrel.

Howie Lee of Oversea-Chinese Banking Corp said if OPEC+ "do pause, it will provide another reason for oil to find a firmer footing".

With inputs from AFP

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