Sensex Nifty: Benchmark stock market indices plunged on Monday as investors remain worried about rapidly rising Omicron cases. However, there are several other factors that contributed to today’s crash. Here is all you need to know.Here are some of the reasons that led to today’s stock market crash:
The rapid spread of the virus has again threatened the global economic recovery, weakening stock markets around the world. Several countries are planning to reintroduce restrictions to limit the spread of new Omicron variants, while some countries, such as the Netherlands, are already subject to a new lockdown.
Experts believe that the Omicron variant has severely hampered the market, leading to a correction in most stock markets, including India.
One reason for the new variant’s fear of investors is that the vaccines may be less effective against the highly modified form of Covid-19. Within less than a month of its discovery, Omicron has become an influential strain in many countries. India has already witnessed a sudden increase in Omicron cases with more than 150 cases.
“The Omicron variant has also hit the market because its transmission is higher than other variants,” Saurabh Jain, assistant vice-president of SMC Securities in New Delhi, told Reuters.
OMICRON intensifies the threat
The threat posed by the rapid spread of the Omicron variant of the coronavirus is the biggest reason behind today’s stock market crash. After the dominant strain in South Africa, it is spreading like wildfire in many European countries
Weak global signals
Not just the domestic market, but the global market has been equally devastated by the impact of Omicron.
Stock markets in China, the United States, Europe, and other parts of the world have also fallen as the new coronavirus form has spread rapidly around the world.
The three major U.S. stock indices have ended in negative territory for the week after the U.S. Federal Reserve spoke of at least three interest rate hikes in 2022 due to high inflation.
For other reasons
Equity markets in Asia and other parts of the world may witness a correction due to the reluctant stance taken by the central banks of developed countries in the face of rising inflation. Over the past few months, global inflation has risen sharply, prompting central banks to tighten policy.
The US Federal Reserve’s plan to raise interest rates from 2022 has received an almost immediate response as many other central banks have raised rates to fight inflation. The Bank of England is the first major central bank to raise interest rates since the outbreak began. The central banks of several other countries have raised interest rates more than once since the epidemic.
