News of the emergence of a new strain of the Corona virus that may be resistant to currently available vaccines has prompted investors to accelerate massive selling in global financial markets, and to resort to safe havens.
Stocks on Wall Street joined the global declines, today, Friday, with investors exiting from the shares of companies most exposed to the epidemic and searching for a safe haven after discovering a new variant of the Corona virus.
The S&P 500 Index is down 1.4%, in early trading, while the more technology-focused Nasdaq Composite Index is down 1%. The decline echoed declines across Europe and Asia that were triggered by an increase in the number of cases following the outbreak of the new mutated virus in parts of Africa.
“Things on the Covid front have escalated very quickly over the past 12 hours,” said Jim Reed, strategist at Deutsche Bank.
He added that the new variable “slowly started to attract increased interest on Thursday, but overnight it began to dominate the markets.”
The Stoxx 600 index ended trading down 3.7%, to record the worst daily performance since June 2020. The index’s losses during the week amounted to 4.5%
The British FTSE 100 index fell 3.6%, the German DAX fell 4.2%, and the French CAC 40 index fell 4.8%.
Shares in the travel and leisure sector plunged 8.8%, their biggest daily loss since March 2020.
While pharmaceutical companies rebounded in US trading, Moderna jumped 16%, and Pfizer jumped 6%. Meanwhile, lab testing provider Quest Diagnostics gained 4%.
Other beneficiaries of the pandemic such as food delivery service Deliveroo and meal service company HelloFresh were among a few gainers in Europe on Friday, while companies subject to travel restrictions such as WHSmith slipped. Oil prices fell.
And the resort to safe currencies on Friday, the Japanese yen and the Swiss franc, while the possibility of lower bets pressure on raising the US interest rate on the dollar. The yen and franc’s gains came at the expense of the Australian dollar and the Norwegian krone, two currencies sensitive to influences on growth, although trading volumes after Thursday’s holiday for the US Thanksgiving made market movements more volatile.
Little is known yet about the new strain of Covid-19 that has so far been detected in South Africa, Botswana and Hong Kong. But scientists believe it has an unusual assortment of mutations that may make it able to evade an immune response and be more susceptible to infection.
The news caused the South African rand to fall more than 2% against the dollar, to its lowest level since last November, but it later reduced those losses.
The Japanese yen was one of the main gainers, as it jumped from the five-year lows it recorded this week against the dollar, rising more than one percent to 113.6. Wallen is on track for his best one-day performance since March 2020.