Futures for Canada’s main stock index on Tuesday tumbled as doubts arose about how effective current COVID-19 vaccines were against the Omicron variant, with sliding oil prices further denting risk appetite.
The S&P/TSX Composite regained 23.1 points to finish Monday trading at 21,149.
Futures were off 1% Tuesday
The Canadian dollar settled 0.24 cents to 78.28 cents U.S. Tuesday.
Warnings from U.S. drugmakers Moderna and Regeneron Pharmaceuticals that their COVID-19 vaccines and antibody cocktails could be less effective against the new coronavirus variant intensified selling pressure in global financial markets.
Ottawa Public Health said late on Monday that two more cases of Omicron were detected in the nation’s capital, bringing Canada’s total number of cases to five.
The Bank of Canada will work with indigenous groups to understand the wounds caused by decades of discrimination and determine how reconciliation can create a more inclusive and prosperous economy for all, Governor Tiff Macklem said on Monday.
Government officials in British Columbia on Monday extended restrictions on the use of fuel by residents, saying it was needed for emergency vehicles as the region recovers from devastating floods.
On the economic slate, Statistics Canada said gross domestic product edged up 0.1% in September as growth in services-producing industries more than offset a decline in goods-producing industries.
The TSX Venture Exchange gained 10.21 points, or 1.1%, Monday to 954.26.
Stock futures tumbled in early Tuesday trading, reversing a Monday rebound on Wall Street as investors reassessed risks associated with the new omicron COVID variant.
Futures for the Dow Jones Industrials stepped back 350 points or 1%, to 34,727.
Futures for the S&P 500 faltered 39.75 points, or 0.9%, to 4,611.25.
Futures for the NASDAQ fell 81 points, or 0.5%, to 16,312.
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. The CEO told the paper there could be a “material drop” in the current vaccines’ effectiveness against this variant. Bancel told the media on Monday that it could take months to develop and ship an omicron-specific vaccine.
Separately, Regeneron said its antibody treatment may have reduced effectiveness against omicron. Regeneron shares lost 3% in pre-market trading.
Travel shares, which led Friday’s drop and then gained on Monday, were taking hits once again in premarket trading Tuesday. Expedia Group fell 2.3%, Norwegian Cruise Line Holdings tumbled 3.8% and American Airlines shares were off 3.3%.
Some leading pharma stocks also took a hit, with Moderna getting the worst of it as the stock decreased 4.2%. Pfizer, however, was one of the few companies to post gains on the S&P 500, rising 1.2%. Stay-at-home stock Netflix also rose, up 0.7% and videoconference leader Zoom saw shares climb 2.3%.
Federal Reserve Chairman Jerome Powell will tell the Senate Tuesday as part of his quarterly testimony on the pandemic that he believes that the omicron variant poses “downside risks to employment and economic activity.” It also further complicates the inflation outlook, the Fed chief said in his prepared markets released Monday evening.
Overseas, markets in Japan collapsed 1.6% Tuesday, while the Hang Seng in Hong Kong also gave way 1.6%.
Oil prices gave way $2.94 to $67.01.
Gold prices gained $13.20 to $1,798.40 U.S. an ounce.