New Covid Variant Hits Global Markets With Losses on Black Friday

Stock Market - Arrow Graph Going Down on Display With Red and Green Figures.
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Global markets are tumbling today following news of a new COVID variant named B.1.1.529. This new variant has been discovered in South Africa — with other incidental cases having been confirmed in Belgium and elsewhere — and the World Health Organization (WHO) has made a statement on the matter.

Dr. Maria Van Kerkhove, COVID-19 technical lead at the WHO, said scientists will convene today to discuss the new variant, according to a tweet.

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CNBC reported losses of 1.8% for the S&P 500 and 2.5% for the Dow Jones Industrial Average shortly after the U.S. stock market opened for a holiday-shortened trading session on Friday, Nov. 26. Crude futures slid 10% to under $70 a barrel, putting the global energy benchmark on track for its biggest one-day loss since July, amid concerns that potential limits on movement could reduce demand for transportation fuels. Bitcoin skidded 8% to rest at just over $54,000.

Concerns about renewed travel restrictions and lockdowns, which in turn could further affect supply chain disruptions, are affecting the markets. Already, the U.K., Israel and Singapore have restricted travel from southern Africa, according to the Wall Street Journal (WSJ).

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Craig Erlam — senior market analyst, UK & EMEA, OANDA — told GOBankingRates that “it’s obviously early days but the current bout of inflation is largely being driven by supply shortages and bottlenecks which will surely worsen in the event of more lockdowns and restrictions across the globe. It will be a massive concern for central banks as it will increase the probability of inflation becoming more permanent, despite being driven again by temporary factors.”

The most worrying thing about the new strain at the moment is how little we know about it, with early indications being that it could be more problematic than Delta, Erlam said. “We’re seeing a typical flight to safety in the markets with equities, commodity currencies and oil getting whacked and traditional safe havens like bonds, gold and the yen getting plenty of love.”

The EU Commission said it “will propose, in close coordination with Member States, to activate the emergency brake to stop air travel from the southern African region due to the variant of concern B.1.1.529,” according to a tweet from Ursula von der Leyen, president of that body.

The announcements hit airline share prices, including those of Delta Air Lines, United Airlines and American Airlines Group, which dropped 7% or more ahead of the opening bell. Cruise stocks, including Royal Caribbean Group took a beating too, according to the WSJ.

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See: Majority of US Companies May Require COVID-19 Vaccine, Survey Finds
Find: COVID-19 and Labor Shortage Expected To Push Supply Chain Issues Into 2022

Also hit by the news are bank shares, and Bank of America, Goldman Sachs and Citigroup were each down more than 4%, CNBC reports.

On the other hand, investors rushed into stocks representing vaccine manufacturers. Moderna shares gained more than 8%, while Pfizer shares added 5%, per CNBC.

“I’m going to operate under the assumption that this is more transmissible, and that leads me to narrow my focus,” Greg Branch, managing partner at Veritas Financial Group, told CNBC, pointing to energy as an area that investors would avoid due to a potential drop-off in demand if the variant causes another wave of COVID.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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