European stocks set to fall sharply at open amid omicron vaccine fears

LONDON — European stocks are expected to open sharply lower on Tuesday, with futures reversing themselves on new fears around the omicron Covid variant and vaccines.

The U.K.’s FTSE index is seen opening 83 points lower at 7,019, Germany’s DAX 238 points lower at 14,997, France’s CAC 40 114 points lower at 6,662, according to data from IG.

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. Bancel told CNBC on Monday that it could take months to develop and ship an omicron specific vaccine.

On Monday, Bancel told CNBC that it will take months to develop and ship a vaccine that specifically targets the omicron variant of the virus that causes Covid-19.

He expressed some uncertainty about omicron, saying that will take at least two weeks to determine how much the mutations have impacted the efficacy of the vaccines currently on the market.

“Depending on how much it dropped, we might decide on the one hand to give a higher dose of the current vaccine around the world to protect people, maybe people at very high risk, the immunocompromised, and the elderly should need a fourth dose” he said.

European and U.S. stocks had rebounded on Monday rose following last Friday’s sell-off as concerns over the newly discovered omicron Covid variant appeared to ease.

In the U.S. stocks got a big boost after President Joe Biden said economic lockdowns in response to the omicron variant are currently off the table and there will be no new travel restrictions.

Covid symptoms linked to the omicron variant have been described as “extremely mild” by the South African doctor who first spotted the new strain. Nonetheless, the World Health Organization warned Monday that the omicron variant is likely to spread further and poses a “very high” global risk.

U.S. stock futures climbed in overnight trading on Monday while Asia-Pacific markets were more cautious, trading mixed overnight, as investors reassessed the risks associated with the new variant.

Data released Tuesday showed Chinese factory activity unexpectedly growing in November, with China’s official manufacturing Purchasing Managers’ Index for November coming in at 50.1. That was above expectations by analysts in a Reuters poll for a reading of 49.6. PMI readings below 50 represent contraction while those above that level signify expansion.

Stateside, investors are looking ahead to key economic data set to be released this week, including the November jobs report on Friday which is expected to show solid jobs growth. Economists surveyed by Dow Jones expect 581,000 jobs to have been added in November.

Earnings come from Easyjet, Greencore, SAS and Volvo Cars on Tuesday while data releases include flash inflation data for the euro zone in November, France’s final third-quarter gross domestic product data as well as German unemployment figures for November.

— CNBC’s Eustance Huang and Spencer Kimball contributed to this market report.