According to Bloomberg News, there are perhaps more important things for stock investors to worry about than the emerging omicron, which is a variant of coronavirus, says strategists at Morgan Stanley.
The strategist team led by Michael Wilson states that while omicron is not being regarded as a major risk factor that will affect the equities, the risks seem to be arising elsewhere especially after Jerome Powell, the chairman of the Federal Reserve indicated that there is a possibility of faster tapering of the asset purchases.
Due to faster tapering of asset purchases, there is tightening of the markets which will lead to valuations being lower as always when it does during the stages of recovery. The same was written in a note by the strategists.
Bloomberg News also reports that Brian Nick associated with Nuveen, which is the TIAA’s investment arm, with $1.3 trillion in the assets under the management said Monday that “the major risk to our outlook remains a sudden tightening of financial conditions if central banks are forced to respond to inflation driven by an overly tight labor market”. As compared to that most of the market as well as economic risks associated with the new variant “are behind” as per Nuveen’s outlook for the year 2022.
Strategists at JPMorgan Chase & Co have also adhered to a similar notion by singling out the hawkish change by central banks as riskier and not Covid-19 new variant as the prime risk for the outlook of the stocks. But while JPMorgan repeated Monday about the base-case scenario related to equities, Morgan Stanley has seen S&P 500 index trending at a lower with declining valuations.
Technology stocks that are relatively sensitive to monetary stringency were seen underperforming Friday and NASDAQ 100 futures contract Monday indicated a drop while the peers at S&P 500 index were seen to be in green.
