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Tuesday, November 30, 2021

Stocks and oil prices tumble as new variant of Covid scares markets

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Stocks and oil prices fell on Friday as global investors’ concern grew over a new variant of Covid-19 that has prompted the UK to impose severe travel restrictions on southern African countries.

The strong sell-off for equities was led by Tokyo’s benchmark Topix index, which fell 2.4 percent on Friday after the UK banned direct flights from all six countries, including South Africa, until the quarantine hotels were up and running.

Futures markets sent US stocks down 1 percent when markets opened on Wall Street later in the day, while London’s FTSE 100 and Europe’s Stoxx 50 indices were expected to drop around 2 percent.

In Hong Kong, where two cases of the variant have been confirmed, the Hang Seng index fell as much as 2.2% amid concerns that the new tension could slow the global economic recovery and further isolate the Asian financial center, which has one of the strictest quarantine systems in the world.

“I look at my screen today, there is hardly any green, everything is red,” said Andy Maynard, a Hong Kong-based trader at investment bank China Renaissance. “Everything is in the tail of this Covid strain.”

Travel stocks were among the hardest hit, with Japan Airlines falling as much as 6.6% and Hong Kong’s flag carrier Cathay Pacific losing 3.6% on concerns about increased international travel restrictions. .

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

Israel has also banned travelers from South Africa, and the World Health Organization will hold an emergency meeting on Friday to discuss the new variant, which has been described as the most worrisome strain found so far by researchers.

In currencies, new travel restrictions caused the South African rand to drop as much as 1.7 percent to around R16 against the dollar, marking the currency’s weakest level in more than a year as the country faces the prospect of spoiling this year’s tourist season.

Other emerging market currencies, such as the Mexican peso and the Turkish lira, fell about the same.

In commodity markets, concerns about global trade disruption weighed on oil prices, with international benchmark Brent crude down 2.3% to $ 80.34 a barrel. US West Texas Intermediate fell 2.9 percent to $ 76.14.

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