Global stocks fell on Friday after news of a possible vaccine-resistant coronavirus variant and oil plunged below $80 a barrel and investors were sent to the safety of bonds, the yen and the Swiss franc.
Little is known about the type found in South Africa, Botswana and Hong Kong, but scientists say it has an unusual combination of mutations, may be able to evade an immune response and be more contagious.
British officials think this is the most significant edition ever and hastened to impose travel restrictions on southern Africa, as did Japan, the Czech Republic and Italy on Friday.
The European Union also said it aimed to stop air travel from the region.
“Markets have been quite complacent about the pandemic for some time, partly because economies have been able to cope with the impact of selective lockdown measures. But we can see from the new emergency brake on air travel that the oil price will be impacted,” said Chris Scicluna, head of economic research at Daiwa.
The World Health Organization is convening a meeting of experts later on Friday to evaluate whether the new version is a “type of concern”.
Global shares fell 0.8% and were on course for their worst week since early October.
European shares fell 2.7% for the worst day since September 2020, with travel and leisure stocks particularly badly hit.
Germany’s DAX fell 3% and Britain’s FTSE 100 fell 2.7% to its lowest level in more than a month.
MSCI’s index of Asian shares outside Japan fell 2.2%, the sharpest fall since August. Casino and beverage stocks declined in Hong Kong, while travel stocks declined in Sydney and Tokyo.
Japan’s Nikkei was down 2.5% and S&P 500 futures were down 1.8%.
Giles Coglan, chief currency analyst at brokerage HYCM, said the move was accelerated as US markets were closed for the Thanksgiving holiday on Thursday.
Giles Coglan, chief currency analyst at brokerage HYCM, said the move was accelerated as US markets were closed for the Thanksgiving holiday on Thursday.
“I expect this story to last for a few days until scientists have a better understanding of it.”
US crude futures fell 5.7% to $73.96 a barrel and Brent crude by 4.66% to $78.38 amid fears of fresh demand.
As investors dashed for the safe-haven asset, the yen jumped more than 1% to nearly 113 per dollar, hitting a five-year low earlier this week.
As investors dashed for the safe-haven asset, the yen jumped more than 1% to nearly 113 per dollar, hitting a five-year low earlier this week.
However, the single currency fell to a 6-1/2-year low of 1.044 francs per euro against the Swiss franc.
“You shoot first and ask questions later,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.
South Africa’s rand fell 2% to a one-year low and its 2030 bond yield rose 25.5 basis points (bps). The yield of a bond moves inversely to the price.
Other bond markets strengthened, benefiting from their safe-haven position. The ten-year Treasury yield fell 11 bps to 1.5277% and the 30-year yield fell 9 bps to 1.8777%.
Germany’s 10-year bond yield fell 6.2 bps to -0.31%.
Gold rose 0.7% to $1,800 an ounce.
The volatility in the market comes against the backdrop of already growing concern about the COVID-19 outbreak, which imposes restrictions on movement and activity in and out of Europe.
European countries have expanded COVID-19 booster vaccinations and tightened restrictions. Slovakia announced a two-week lockdown, the Czech government would close the bar early and Germany passed the 100,000 COVID-19-related death threshold.
“I don’t think there’s any going back to a pre-COVID-19 world,” said Mark Arnold, chief investment officer at Hyperion Asset Management in Brisbane.
“We’re just going to get mutations over time and it’s going to change the way people work in the economy. That’s just the reality.”
Global #stocks tumbled on Friday and #oil fell below $80 a barrel after news of a possibly vaccine-resistant #coronavirus variant sent investors scurrying to the safety of bonds, the yen, and the Swiss franc.https://t.co/1XsBwecAg8
— Alghadeer English (@alghadeertv_eng) November 26, 2021