By Anisha Sircar

(Reuters) – European shares dropped on Thursday as a result of a drop in U.S. equities overnight. This was due to concerns about the Omicron coronavirus variant, and possible interest rate increases sooner than expected.

The continental stock market was 0.9% lower in morning trading, after falling 1.3% in the previous session.

It is an abrupt reversal from gains made Wednesday when the STOXX 600 had its strongest session in nearly six months.

Europe’s equity benchmark saw sharp volatility recently due to uncertainty over how severe and contagious the new variant was and whether current vaccines will be able to combat it.

Equiti Capital’s market analyst David Madden said, “We will continue in this pattern of down one day and up the next as long the Omicron story is unknown.”

“We will not re-test Europe’s November highs unless we have a clear understanding of the variants knock-on effects and until we can determine if we are going down the road to lockdowns.”

Wall Street was rocked by a late selling frenzy on Wednesday following the confirmation that the U.S. had an Omicron infection. Federal Reserve Chair Jerome Powell also raised the possibility of inflation not falling in the second half next year. [.N]

Madden stated that there has been some knee-jerk reactions to the discovery of the latest variant in the United States. However, this saleoff won’t last long as many people will soon realize it doesn’t pose much threat to U.S. recovery.

U.S. futures showed a nearly 1% gain for the.

In Europe tech stocks suffered the most, with Infineon Technologies Technologies, AMS, ASML and ASML all falling between 2.3% (NASDAQ:) and 4.3%. The report from Apple (NASDAQ) highlighted slowing iPhone 13 demand.

Hermes and Richemont, luxury goods firms, fell 2.4% & 1.2%, respectively, despite them being in the Euro STOXX 50 Index.

Vifor Pharma rose 15.9% to top the Swiss mid-cap index following media reports that CSL, an Australian biotech company (OTC:), is interested in buying the drugmaker.