Stock markets rocked again by fears over emerging variant of coronavirus – .

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Stock markets rocked by fears over emerging variant of COVID – .


Global stock markets and oil prices fell on Friday after South Africa identified a new variant of the potentially fast-spreading coronavirus and the European Union proposed to suspend air travel from the region.
The EU-27 proposed a suspension of mass travel to member governments after South Africa said the so-called Nu variant was spreading in its most populous province.

Britain quickly banned flights from South Africa and five neighboring countries. Austria imposed a 10-day lockdown while Italy restricted the activity of unvaccinated people. The Americans have been advised by their government to avoid Germany and Denmark. Belgium and Israel have already reported a handful of people testing positive for the new variant, and the multitude of data points has added to a wave of uncertainty.

In New York, the Dow Jones Industrial Average lost more than 2.5%, its biggest drop in more than a year, to close at 34,899. In Toronto, the TSX Composite Index lost nearly 500 points, or 2.25 percent, to end the day at 21,125.

“This news completely overshadowed the early anecdotal reports of heavy in-person and online traffic for Black Friday sales,” said Colin Cieszynski of SIA Wealth Management in Toronto.

Friday would normally be a quiet day for the US stock markets due to the Thanksgiving holiday on Thursday, as New York stock markets are expected to close at 1 p.m.

The oil and tourism companies hardest hit

This restricted trade could potentially exacerbate market concerns as there is a smaller pool of buyers and sellers available to compensate for outliers.

“What you are seeing is the absence of many active managers in the United States and many worried panic sales… around the world,” said Dennis Mitchell, CEO of Starlight Capital, in an interview.

The VIX – known as Wall Street’s “fear index” because it measures volatility – climbed more than 40% to exceed 26 points. This is its highest level since January 2021, before vaccination campaigns started to intensify.

Anything to do with energy or travel and tourism is particularly hard hit as investors digest the prospect of yet another round of limitations on international travel.

The benchmark North American oil price known as West Texas Intermediate fell over US $ 10 to close at just over $ 68 a barrel. This is the worst one-day performance for oil since the price briefly fell below zero in April 2020.

Jeremy McCrea, managing director of Raymond James Energy Research, said that while the anxiety is real, part of the sale of oil comes from traders who are only profiting from the recent run while they can.

“Considering the rise in oil prices… there is a lot of profit taking, a lot of speculators are saying, ‘I’m not sure what that really means,’” ​​he said in an interview.

Oil prices plunged on Friday on news of the spread of a new, possibly more transmissible, variant of COVID-19. (Todd Korol/Reuters)

“Wait a few weeks until we have a better idea of ​​what this really means. “

McCrea said the oil market had just experienced a particularly volatile few weeks, first with OPEC trying to push prices up by slowing the increase in production, and then by the Biden administration releasing millions of barrels to have the opposite effect.

With fears now of a new variant that could dampen global demand for oil, he said this shows that there are “still a lot of big factors that can change prices here a bit.”

Shares of Air Canada lost more than eight percent while those of Carnival cruise line lost 11. The Hilton and Marriott hotel chains both lost more than six percent.

“These announcements triggered a massive sell-off in travel-related stocks (airlines, cruise lines, hotels, etc.) and triggered a pick-up in home and vaccine stocks,” Cieszynski said.

Pfizer shares rose nearly seven percent while Moderna shares jumped more than 22 percent.

“Today’s price movements and sharp moves have been a good reminder of the need to avoid virus complacency until 2022,” said currency analyst Audrey Childe-Freeman of Bloomberg Intelligence in a note to customers.

Lisa Kramer, professor of finance at the Rotman School of Management in Toronto, says investors are reacting with a fear similar to what happened at the start of the pandemic.

“It’s not uncommon for some people to overreact when we have dramatic news,” she said in an interview. “And you don’t have to have a lot of people panicking for the markets to react strongly. “

Cryptocurrencies sold off strongly as investors turned to things like gold, bonds and the US dollar which are seen as safer stores of value.

“At times like this we have a real sense of what investors consider to be real and reliable safe havens and bitcoin is down 8% today which dealt a fatal blow to its information. safe haven identification, putting an end to another crypto myth that has surfaced over the years despite the lack of supporting evidence, ”said analyst Craig Erlam of exchange firm Oanda.

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