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Equities, oil prices, U.S. Treasury yields all drop on COVID variant fears

Stock MarketsNov 26, 2021 08:26PM ET
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2/2 © Reuters. FILE PHOTO: Passersby wearing protective masks are reflected on an electronic board displaying stock prices outside a brokerage amid the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan, September 29, 2021. REUTERS/Issei Kato 2/2

By Chris Prentice and Carolyn Cohn

WASHINGTON/LONDON (Reuters) - Shares tumbled on Wall Street on Friday as they reopened after Thanksgiving, while European stocks saw their biggest sell-off in 17 months and oil prices plunged by $10 per barrel as fears over a new coronavirus variant sent investors scurrying to safe-haven assets.

The World Health Organization (WHO) on Friday designated a new COVID-19 variant detected in South Africa with a large number of mutations as being "of concern," the fifth variant to be given the designation.

Unofficially, the Dow Jones Industrial Average closed down 2.53% at 34,899.34 in its largest percentage drop in more than a year. The S&P 500 lost 2.27%, its worst one-day drop since Feb. 25, and the Nasdaq Composite dropped 2.23%, the biggest one-day route in two months.

U.S. markets closed early on Friday after being shut all day on Thursday for the Thanksgiving holiday.

The benchmark STOXX 600 index ended 3.7% lower on the day, leaving it down 4.5% for the week. The volatility gauge for the main stock market hit its highest in nearly 10 months.

Companies that had benefited from an easing of COVID-related restrictions this year, including AMC Entertainment (NYSE:AMC), plane engine maker Rolls Royce (LON:RR), easyJet (LON:EZJ), United Airlines and Carnival (NYSE:CUK) Corp all fell.

Retailers dropped as Black Friday, the start of the holiday shopping season, kicked off as the new variant fuelled concerns about low store traffic and inventory issues.

In Europe, the travel and leisure index plummeted 8.8% in its worst day since the COVID-19 shock sell-off in March 2020.

"Bottom line is this is showing that COVID is still the investor narrative, a lot of today’s movement is driven by the South African variant," said Greg Bassuk, chief executive officer of AXS Investments in Port Chester, New York.

"We have been talking about four or five factors that have been driving the last couple of months' activity – inflation fears, some economic data, Fed policy – but what we have seen over the last year is that big developments with respect to COVID really have ended up eclipsing some of those other factors by a substantial degree and that is what is driving today’s market activity."

Little is known of the variant detected in South Africa, Botswana and Hong Kong, but scientists said it has an unusual combination of mutations and may be able to evade immune responses or make the virus more transmissible.

Britain said the new variant was the most significant variant to date and was one of several countries to impose travel restrictions on southern Africa.

The European Commission also said it wanted to consider suspending travel from countries where the new variant has been identified, though the WHO cautioned against hastily imposing such restrictions.

Global shares fell 1.81%, their biggest down day in more than a year. France's CAC 40 shed 4.8%. The UK's FTSE 100 dropped 3.6%, while Germany's DAX fell 4.2% and Spain's IBEX lost 5.0%.

Malaysian rubber glove maker Supermax, which soared 1500% during the first wave of the pandemic, leapt 15%.

MSCI's index of Asian shares outside Japan dropped 2.44%, its sharpest fall since late July.

In commodities, oil prices plunged. Gold prices reversed earlier gains seen amid the move away from riskier assets.

U.S. crude was last down 12%, at $69.02 per barrel by 1:21 p.m. EST (1812 GMT). Brent crude dropped 10.5% to $73.59.

Spot gold prices were down 0.09%.

As investors dashed for safe-haven assets, the Japanese yen strengthened 1.87% versus the greenback, while sterling was last trading at $1.3331, up 0.08% on the day.

The dollar index fell 0.757%, with the euro up 1% to $1.1318.

U.S. Treasury debt yields posted their sharpest drop since the pandemic began. Treasuries benchmark 10-year notes last rose to yield 1.4867%. The 2-year note last rose to yield 0.4941%, from 0.644%. [US/]

"A flight to safety is underway with the 10-year U.S. Treasury yield down," said Keith Lerner, co-chief investment officer at Truist Advisory Services. "The proximate cause of the sell-off is yesterday’s announcement of a new COVID-19 variant in South Africa, which investors fear could weigh on economic growth."

The market swings come against a backdrop of already growing concern about COVID-19 outbreaks driving restrictions on movement and activity in Europe and beyond.

Markets had previously been upbeat about the strength of economic recovery, despite growing inflation fears.

Equities, oil prices, U.S. Treasury yields all drop on COVID variant fears
 

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Comments (90)
Mark McMillan
Mark McMillan Nov 28, 2021 7:58PM ET
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search: the fall of cabal by Janet Ossebaard it's a good series with red pill information.
AOne Investor
AOne Investor Nov 27, 2021 8:13AM ET
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a big crash was just announced, if you stay long not to worry, but if you need the money better ruch to sell on Monday.
S S Shet
pingo_0070 Nov 27, 2021 8:13AM ET
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don't unnecessary create panic ... we now know much better than in 2020 of how to handle covid ... such varients are bound to come every now and than.. tomorrow zeta varient than epsilon than gamma than whatever ... human race is fighting these viruses since millennia .. it's our immune system which has kept humans alive not these stupid vaccines or lockdowns or restrictions ... don't sell in panic ... don't book losses .. this will go away as delta went away ...
Martijn WN
Speculeerbeer Nov 27, 2021 8:13AM ET
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Just wait 2 months and we'll be back to record highs again. All this panic usually doesn't last very long. I'm a buy and hold investor, so I don't worry about the fluctuations in the short term anyway.
Martijn WN
Speculeerbeer Nov 27, 2021 8:13AM ET
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Pretty short sighted. If you look at the data you see that the vaccine is effective in preventing hospitalisations. Of course our immune systems work to fight viruses, but vaccines help to put your immune system to work, in order to prevent infections. Are you suggesting that vaccines don't work? Because historical data suggest otherwise.
Empire Destroyer
Empire Destroyer Nov 27, 2021 8:13AM ET
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Martijn WN I am thinking two weeks for Santa rally and we back to ath
John Laurens
John Laurens Nov 27, 2021 4:35AM ET
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If humans hadn't been so pompous as to think they could beat this with vaccines, it'd be gone by now. Instead we have given China's gift enough time and cause to mutate, I said it since the beginning this thing is gonna get every last human on Earth before it's done. It will eventually go away though. Reuters is wrong about that
Kelvin Mwangi
Kelvin Mwangi Nov 27, 2021 1:53AM ET
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Time to invest in this tech revolution. In every revolution, blood must be shed. Just stay calm if your portfolio is well diversified, no the time bomb lanes the likes of airlines. Enjoy Cyber Monday and be ready for the change.
S S Shet
pingo_0070 Nov 27, 2021 12:05AM ET
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simple advise for sane people on the forum ... there r only three possibilities..1. this strain is not lethal , so There won't be COVID in 6 mth, so markets will fully recover , so don't worry ..2. this strain is lethal , so don't worry of money, bcoz u won't be there 3. both covid and u live together, so nothing to worry ..simple ... so stay invested ..
S S Shet
pingo_0070 Nov 26, 2021 11:56PM ET
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Market can not crash for the same reason twice ...yes .. it can react momentarily...find some other reason other than Covid( factored in ), FED taper ( factored in ) , interest rate hike( factored in ) ... rate of fed taper is something which can give surprise.. but new varient and possible curbs will only lead to slow tapering .. hence only two people should sell now .. first those sitting on huge profits should book profit and second thosr who are Fools ..
Sanjay Motwani
Sanjay Motwani Nov 26, 2021 11:42PM ET
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Don’t we still know about patients infected by new variant. I am eager to know how they’re doing. That could best way for layman to know if new variant is lethal.
Khurshid Paray
Khurshid Paray Nov 26, 2021 9:40PM ET
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But ultimately stocks will rise againhence don't feel panic.Instead add quality stocks to your portfolio but in staggered manner
Tyshaun Hamilton
Tyshaun Hamilton Nov 26, 2021 9:40PM ET
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That buy back up is going to be beautiful
Khurshid Paray
Khurshid Paray Nov 26, 2021 9:38PM ET
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Further sell off may be seen in coming sessins.
Kaveh Sun
Kaveh Sun Nov 26, 2021 9:31PM ET
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Media hypes it up so they can push oil, stock price down for the rich and Biden. Biden will declare history for ‘lease reserve oil’ without realeasing any drop.
Ac Tektrader
Ac Tektrader Nov 26, 2021 9:31PM ET
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great ...Biden is finally using tactics to get the oil cartels to do what's good for American consumers.
Aaron Pierett
Aaron Pierett Nov 26, 2021 9:31PM ET
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Biden doesn't know what shoe goes on which foot. unquote
 
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