There has only been one thing on everyone’s minds this week: Omicron.
Our interview with Stéphane Bancel, chief executive of Moderna, quickly became the most read companies story of the year (so far) when he predicted there will be a “material drop” in existing vaccines’ effectiveness against the new variant.
Scientists are mainly concerned about Omicron’s genetic profile. Some mutations suggest increased transmissibility, while changes in the genetic code make it harder for the immune system – trained by vaccination or prior infection – to tackle a new strain.
Variant worries have rippled through economies too. On Wednesday, the OECD increased its inflation predictions for 2022 to 4.4 per cent for the G20, up from 3.9 per cent in September. It also warned that Omicron could delay the world economy’s recovery.
Inflation in the eurozone also hit 4.9 per cent in November – the highest it has been since the single currency was created. If you would like to compare inflation around the world, our new inflation tracker is worth exploring.
And as the ECB faces pressure about its monetary policy, Fed chair Jay Powell chose this week to signal his support for a quicker tapering of the central bank’s asset purchase programme. This, alongside concerns about Omicron, has triggered fresh volatility in markets.
Indeed, US junk bonds were hit by the sharpest sell-off in more than a year in November due to fears that the new variant could affect low-rated companies’ ability to repay debts.
Elsewhere, ESG has been making headlines. In an annual review, the IEA found that while record amounts of renewable electricity were added to the global energy system in 2021, it is still only half what it needs to be every year to reach net zero emissions by 2050.
Meanwhile ExxonMobil promised to reduce the amount of carbon dioxide released with each barrel of oil it pumps. The supermajor aims to decrease its greenhouse gas intensity by 20-30 per cent by 2030. One expert labelled the targets “grossly inadequate”.
Commodities group Glencore was also under pressure this week. Activist investor Bluebell Capital Partners called on the company to spin off its thermal coal business, divest non-core assets and improve corporate governance.
And Microsoft felt the force of shareholders as they backed a protest vote calling on the tech giant to reveal more about its handling of sexual harassment claims. This follows recent cases, and the revelation that co-founder Bill Gates had a relationship with an employee.
Closer to home, the Cabinet Office warned KPMG that it could be banned from bidding for public contracts if there is a repeat of recent scandals. The Big Four firm’s reputation has taken a hit recently after a series of fines for misconduct.
And Brexit is delaying a US-UK trade deal. Talks about removing tariffs on UK steel and aluminium are being held up because Washington is concerned that London’s threats to override the Northern Ireland protocol will undermine peace.
And finally, “the City of London is in danger of becoming a sort of Jurassic Park,” writes Paul Marshall, chair of investment manager Marshall Wace. He argues that the income fund sector should be replaced with funds that focus more on growth and the future.
