RIO DE JANEIRO, BRAZIL – Friday (26) was marked by a generalized drop in global stock markets due to the detection of Omicron, a new Covid-19 strain, which raised concern among authorities worldwide.
However, airlines, tourism and oil companies were the most affected, both in Brazil and abroad – as these sectors are directly linked to the economic recovery and the reopening of borders.
In Brazil, Gol (GOLL4) and Azul (AZUL4) preferred shares suffered the most, plunging 11.81% and 14.18%, respectively. They were followed by travel agency CVC (CVCB3) common shares, slumping 11.07%. PetroRio (PRIO3) common shares were also in the top 5 casualties, dropping 8.74%.
In the United States, American Airlines plunged 13.30%. Exxon Mobil depreciated almost 5%.
AIRLINES PLUNGE ON CONCERNS OVER NEW TRAVEL RESTRICTIONS
“On airlines and the tourism sector, the reason is quite clear: the advance of Covid-19 can have a direct impact on demand, which had been rebounding,” explained InfoMoney’s market specialist Henrique Esteter. “The prospects for the end of the year were high and now this may be jeopardized,” he added.
A number of countries began restricting travel again yesterday. The U.S., Canada, and the UK have now restricted travel to and several southern African nations – the region where Omicron emerged. In the U.S., the new measures come less than a month after President Joe Biden’s easing of travel restrictions, which cleared travel between the country and some 30 nations.
Gol closed the session trading at a value close to that of May 2020. Azul hit its 2021 minimum and dropped back to the level it had in August last year.
“The reaction is not exaggerated because airlines have recovered well. It’s just that the outlook is very hazy. When the magnitude of the impact is hard to determine, the market usually weighs its hand. For now these are just possibilities,” Esteter added.
As for oil, the analyst explains that the advance of the new Covid-19 variant may thwart economic recovery, reducing the demand for the commodity. Coupled with the fact that some countries are still releasing their strategic reserves, this adds to the chance of oversupply in the first quarter of 2022, if restrictions return.
Brent oil contracts for January 2022 closed down 13.04%, trading at US$68.17. The WTI price for the same month dropped 11.35%, to US$72.89.
In addition to PetroRio, Petrobras (PETR3;PETR4) saw its common shares drop 4.36% and preferred shares 3.88%. 3R Petroleum (RRRP3) slumped 7.10%.
“The downward trend was generalized, hitting commodities, banks, and construction companies, for example. Concerns over the variant overshadowed even Black Friday and the drop in future interest rates in Brazil, which could offer some respite to retail shares,” said BRA economist and partner Alexsandro Nishimura.
Méliuz (CASH3) is the company closing the top 5 of the largest falls, usually benefited by the drop in interest rates for being linked to retail and for being considered tech, but not even that prevented its common shares from depreciating 10.42%.