The World Health Organization’s (WHO) classification of the new Covid-19 variant, Omicron, as a “variant of concern” on Nov 26 sent shock waves around the world. Governments rushed to ban travellers from South Africa and several neighbouring African countries, where the variant was initially discovered. Major developed nations were among the fastest to react, despite their high vaccination rates — a sure sign that nearly two years into the pandemic, the world remains extremely jittery.
Unsurprisingly, stocks fell sharply as panicked investors rushed to sell. The closely watched Dow Jones Industrial Average suffered its worst day since October 2020, falling 2.5% in an immediate kneejerk reaction. Bond yields, which are inversely correlated to prices, fell as expectations for rate hikes were pared back with these latest worries. So, how worried should we be?
The biggest concern about Omicron is its high number of mutations — about 50, including 32 changes to the spike protein, which is the main target for vaccine-induced antibodies. Preliminary data indicates higher odds of reinfection, which suggests that Omicron could be more effective in evading the body’s natural immunity. Other than that, little else is known — whether it is more transmissible than other variants, more virulent, more able to evade existing vaccines and therapeutics (the high number of mutations implies this is likely but the key question is, to what degree) or less detectable with current rapid test kits. We are told there will be more definitive information in about two weeks.