Stock markets in both the United States and Europe saw major sell offs as news of the new Omicron COVID-19 variant grabbed headlines around the world.

On Friday, the Dow Jones Industrial Average fell 905.04 points to record its worst day-to-date for 2021 while, across the pond in the United Kingdom, the FTSE dropped 3.6 per cent to 7,044, its lowest level since October 6. Frankfurt’s DAX closed 4.2 per cent lower as investors ran for cover.

The Omicron variant discovered in Africa is said to spread faster and is more pernicious than both the Delta and Beta strains.

Cases of this B.1.1.529 variant have already turned up in both the UK and Hong Kong. Many countries have already made the move to shut out travelers from African countries as panic sets in.

Travel and leisure stocks took a beating with Carnival Cruises down 16 per cent and British Airway’s parent, International Airlines Group (IAG) falling by 15 per cent. Shares in both American Airlines and Delta Airlines were down 10 per cent with oil prices tumbling by US$10 a barrel. Analysts are predicting a return to travel restrictions and see Omicron impairing the outlook for economic recovery.

“COVID had seemingly been put in the rear view mirror by financial markets until recently. At the least, the virus is likely to continue throwing sand in the gears of the global economy in 2022, restraining the recovery, keeping the kinks in the supply chain,” said Chief Economist at BMO Capital Markets, Douglas Porter.

Dr Anthony Fauci, chief medical advisor to the President of the United States, commenting on whether this new Omicron variant is already in the United States, said: “We have not detected it yet, but when you have a virus that is showing this degree of transmissibility and you’re already having travel-related cases… it almost invariably is ultimately going to go all over. You have to be careful and assume that that’s the case.”

Question is, whether this panic is a storm in a teacup with markets staging a quick recovery as fear subsides. As the Christmas season draws closer, travel bans will wreak havoc and are likely to exacerbate anxiety. Caribbean tourism destinations are banking on a good winter season and the last thing they need to hear is the imposition of new travel restrictions having already endured that at the end of last year.

“The immediate way the tough restrictions were imposed was a reminder of just how tied companies fortunes are to snap government decisions and the latest twists in the trajectory of the virus,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.