When vaccination finally advanced significantly in Brazil and life seemed to return to normal, it arrived: the omicron variant. And, in addition to the worrying news, we are back to see stock exchanges sinking around the world, again due to the coronavirus.
A week after news about the sad news hit the headlines of newspapers, the WHO (World Health Organization) has already released statements pointing out that the omicron “represents a high risk for the world” and US Treasury Secretary Janet Yellen said that it can cause significant problems for the global economy. Uncertainties are still many.
On a daily basis, the effects go through the City of São Paulo to cancel New Year’s Eve and further distance the end of the use of masks. In your pocket, the result is a drastic drop in the stock price.
Since the 24th, when the main news appeared about the new variant of Covid-19, the S&P 500, an indicator that gathers the shares of the biggest companies in the USA, has fallen 2.4%. In Brazil, the news heated up the next day and, so far, the Ibovespa has fallen by 1.9%. Both were discharged this Thursday (2/12), but the broad scenario is still the same, with or without the PEC of default in court orders.
Why this “despair”, if we already have so many people vaccinated and we’ve been through this before? After all, we learned back in the beginning of 2020 how to deal with killer virus pandemics, didn’t we?
It turns out that in addition to the vaccines —Pfizer, Coronavac, Astrazeneca or Janssen— another injection was essential for overcoming the economic crisis caused by the first wave: the injection of money.
Incentive programs from different governments came in the wake of the pandemic, to make money circulate, even with trade behind closed doors and the service sector unable to function.
As there is no simple solution to complex problems, these monetary injections came at a high cost: inflation. And to combat its fearful effects, the United States is just pulling the reins and curbing the stimulus to the economy.
Federal Reserve Chairman Jerome Powell has announced that he is expected to accelerate the end of Fed asset purchases this month as risks of more persistent inflation mounted.
Thus, repeating the dose of the vaccine used by the market to fight Covid-19 is off the menu in the case of the omicron variant. Therefore, insecurity hit the big investors.
Uncertainties about the effectiveness of vaccination and new restrictions on movement have increased stock market volatility. Although deaths and infections from the new variant are few, it is a new variable in the market accounts, which is always bad, as it reduces predictability.
These falls leave without ground those who bet too much on retail giants like Magazine Luiza (MGLU3) and Pão de Açúcar (PCAR3), thinking about the resumption of “normal life”. The suffering is milder for those who knew how to balance their portfolio with assets other than stocks, such as the dollar and real estate funds.
Real estate funds, by the way, which, as I pointed out here, a week ago, were being traded at prices considered low. Since the publication of the text, on November 26, the Ifix, an index that measures the average performance of the FIIs, has risen 1.6%, without major bumps.
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I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
