It is not precisely the consequences of the new omicron variant that should concern investors in stocks: it is the possible acceleration in the reduction of asset purchases by the US Federal Reserve (Fed) which could pose the greatest threat to the stock market, according to reports. strategists de Morgan Stanley.
“The reduction in asset purchases is tightening the markets and will lead to lower valuations, as it always does in any stage of recovery,” experts commented after Fed Chairman Jerome Powell, mention possible acceleration in order to boost the US economy in its fight against rising inflationary pressures.
According to Morgan Stanley specialists, as a result of the changes in monetary policy, the S&P 500 index, which includes the largest US companies in terms of capitalization, will fall. They also estimate that investors will begin to demand much higher risk premiums, as they expect that the official long-term interest rate is considerably higher than it is now.
Are markets no longer afraid of covid-19?
As for the omicron, on the other hand, JPMorgan predicted last week that markets would continue to rise despite the spread of the new variant of the coronavirus. The bank considers that its appearance should be considered “in the context of increased natural immunity and acquired by vaccines, lower mortality and new treatments. “
Similarly, these strategists predict that the gradual normalization of financial markets after the pandemic will continue in 2022, with an S&P 500 index rising to around 9 % from their current levels.