LONDON — Stock markets could be facing several weeks of volatility following the emergence of the omicron Covid-19 variantHowever, economists and strategists warn investors not to rush.

Stocks worldwide sold off sharply on FridayAs news about the variant and its potential concerning mutation profile spread, U.S. and European Equities recovered losses on Monday, but futures plunged again Tuesday as fears of the variant arose. efficacy of vaccines when faced with the omicron variant.

According to health officials, it could take several weeksTo understand whether or not the strain is capable of evading existing antibodies and vaccines, as well as how it impacts those who are infected.

However, travel restrictions have been imposed by many countries. On Monday, strategists said that market participants will continue to monitor the variant’s development in the short term. This could lead to volatility.

Although Friday’s equity market pullback was the most severe since 2021, economists and strategists don’t see the need for sustained fall and advise clients to keep their eyes on long-term fundamentals.

Financials, health care, energy

Mark Haefele, Chief Investment Officer for Global Wealth Management at UBSMonday’s note by, indicated that Omicron is unlikely to change our belief that global economic recovery has been slow and that future growth will be strong.

We recommend that you do not make hasty changes to your investment strategy. Haefele stated that the market’s reaction might have been worsened by low liquidity during Thanksgiving week. Volatility could continue to rise as systematic investors adjust their positioning.

It shouldn’t surprise you that there is some market volatility following a rally like this. It serves as an example of how important it is to be diversified across sectors and markets.

Haefele sees financials and energy as positive sectors. Haefele expects that oil prices will remain high through 2021-2022. He also believes there will be an international benchmark. Brent crudeUp to $90 per barrel in March

Financials suffered from falling yields Friday but were able to recover after the solid 3Q. [third-quarter]”Reporting season, sector earnings were upgraded and most recent European Central Bank data point towards an increase in private-sector credit growth,” Haefele said.

Haefele advised investors to look into health care stocks as they have both “growth and defensive potential.” After recent losses, Haefele stated that the sector’s strategic outlook remains positive and that valuations remain attractive.

According to us, “A catch up is necessary.” As uncertainty surrounds, we believe that this is now more likely. U.S. drug pricing is resolved,” Haefele said.

UBS increased its exposures to private equity and hedge fund alternatives. These funds are considered to be well-placed for offering risk-adjusted return in down markets. Haefele advised investors to look into “unconventional source of yield,” such private credit, dividend-paying stocks and other alternative sources.

It’s time for a pullback

Mazars’ chief economist in London George Lagarias stated Monday in a note that, while it is hard to know if Friday’s reaction was overreacting, there are enough evidence that suggests investors should be patient before attempting to correct the situation.

Lagarias stated that global stocks have already seen a 21% increase in year-on-year. “Even if this event had not occurred, it wouldn’t have been the worst moment for market participants, to make some profits off the table.”

He suggested that with ample liquidity, investors might look at lower valuations to put their money to use. As markets rose on Monday, this trend appeared to be evident in Europe as well as the U.S.

Holger Schmieding Berenberg’s Chief Economist, echoed the sentiment. On Monday, Schmieding told investors that while Friday’s reaction to uncertainty was explained by the market response, the longer-term fundamentals for the recovery were likely to be deferred rather than delayed.

Schmieding recognized that news flows could worsen before they improve in the next days but stated it’s unlikely it would dramatically alter central bank policies regarding monetary tightening.

Schmieding explained that “as we have argued starting mid-March 2020 the pandemic doesn’t justify a dramatic, lasting re-rating in equity prices of the total value of the productive capability of major economies”

“In summary: We don’t see Omicron being a reason to have a bearish market for the long-term.”