Stocks and oil prices tumble as novel variant of coronavirus scares markets

Global stocks fell on Friday as investors rushed to stocks of companies most exposed to the pandemic and sought refuge in shelters after the discovery of a new variant of the coronavirus shook market sentiment.

A large selloff in European stocks followed similar moves in Asian markets. The Stoxx 600 in Europe fell 3.1% in morning trading, as France’s CAC 40 index and Germany’s Dax 30 fell by similar margins.

London’s FTSE 100 index fell 3.2%. As a sign of market anxiety, shares of British Airways parent company IAG, German carrier Lufthansa and aircraft maker Airbus fell around 10%.

Other businesses vulnerable to travel restrictions, such as WHSmith and business conference operator Informa, have also fallen, while beneficiaries of the pandemic like the food delivery service Deliveroo and the meal kit company HelloFresh were among the small number of winners on Friday. Oil references on both sides of the Atlantic fell by more than 5%.

“Things have escalated on the Covid front fairly quickly over the past 12 hours,” said Jim Reid, strategist at Deutsche Bank. Yesterday, the new variant “was slowly starting to gain more and more attention, but overnight it started to dominate the markets,” he said.

The B.1.1.529 Sars-Cov-2 variant, first identified in Botswana, is believed to be behind an increase in Covid cases in southern Africa over the past week and has alarmed officials of the global health due to its apparent ability to evade vaccines and spread faster than the Delta variant.

The EU and the UK have decided to impose travel restrictions on a group of southern African countries, while Israel has banned travelers from South Africa. The World Health Organization will hold an emergency meeting on Friday to discuss the new variant, which has been described as the most worrying strain ever encountered by researchers.

Hong Kong’s benchmark Hang Seng fell more than 2.5% as the new strain of coronavirus could slow the global economic recovery and further isolate the Asian financial center. Two cases of the variant were confirmed in Hong Kong on Thursday evening.

“I’m looking at my screen today, there’s hardly any green – it’s all red,” said Andy Maynard, a Hong Kong-based trader at investment bank China Renaissance. “It’s all about the tail of this Covid strain. “

Elsewhere in Asia, Tokyo’s Topix benchmark fell 2% on Friday after the UK banned direct flights from all six countries, including South Africa, until hotels in quarantine are operational.

Travel stocks were among the hardest hit, with Japan Airlines down more than 6% and Hong Kong’s national carrier Cathay Pacific losing 4% amid concerns over increased restrictions on international travel .

Futures following the Wall Street S&P 500 index fell 1.9% at the start of European trading. US stocks will trade for fewer hours on Friday after the Thanksgiving holiday, which could reduce trading volumes and increase volatility on US stock exchanges.

Public debt recovered as investors turned to assets traditionally considered less risky. The yield on the benchmark 10-year US Treasury bond fell 0.12 percentage points to 1.53 percent on Friday. The yield on its German counterpart fell 0.07 percentage point to minus 0.32 percent. The Japanese yen, which typically rises during times of growing market angst, has climbed more than 1% against the dollar.

Meanwhile, oil prices were hit hard with Brent, the international marker for crude, falling more than 5% to $ 77.78 a barrel, and the US benchmark West Texas Intermediate dropping 6.7. % to $ 73.13. These moves marked the largest daily declines since July and follow a decision this week by the United States, United Kingdom, India, South Korea, Japan and China to release reserves. strategic oil, thus adding more supply to the market.

“The sudden appearance of a new variant of the coronavirus raises serious concerns about economic growth and the oil balance sheet in the coming months,” said Tamas Varga of broker PVM.

Industrial metal prices were also down, with copper slipping 2% to $ 9,558 a tonne and aluminum 2.1% lower at $ 2,658. Concerns about the real estate sector in China also weighed on this market.

Gold weathered the weak market trend, however, rising $ 18.5, or 1%, to $ 1,802 per troy ounce as investors sought safe places to park money.

“The price of gold should remain strong in this environment and the subject of tapering should take a back seat for now,” said Alexander Zumpfe, precious metals trader at German industrial group Heraeus.

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Felix J. Dixon