Stocks drop, havens rebound as new COVID-19 variable scares investors

Written by Tom Westbrook

SYDNEY (Reuters) – Stocks fell on Friday and were headed for their biggest weekly drop in nearly two months, while safe-haven assets such as bonds and the yen rose as concerns about future growth intensified and US interest rates rose.

An alternative, discovered by scientists in South Africa, may be able to evade immune responses and prompt Britain to expedite the imposition of travel restrictions on South Africa.

The South African rand fell 1% in early trade, as did US crude futures. S&P 500 futures fell 0.4%, while the risk-sensitive Australian and New Zealand dollars fell to three-month lows.

“The trigger was the news about the COVID formula … and the uncertainty about what that means,” said Ray Atrell, head of FX strategy at National Australia Bank in Sydney. “You shoot first and ask questions later when this news breaks.”

Japan’s Nikkei fell 1.7% in early trading and Australian shares fell 0.6%. [.T][.AX]

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2% for a weekly decline of 1% and global stocks, while still near record highs, were heading for a weekly decline of 0.7%, the largest since early October.

Little is known about the new variant. But the scientists told reporters it had a “very unusual constellation” of mutations, as it might help it evade the body’s immune response and make it more transmissible.

British authorities believe it is the most important alternative to date and fear it may resist vaccinations.

Moves in Treasuries were sharp at the opening in Tokyo – after the Thanksgiving holiday – as yields quickly eased some of the week’s gains. The benchmark 10-year bond yield fell 5 basis points to 1.5927%.

The yen jumped about 0.4 percent to 114.91 per dollar, and gold rose 0.2 percent to $ 1792 an ounce. [FRX/][GOL/]

These moves come against the backdrop of concern about the outbreak of the Corona virus, COVID-19, which has led to restrictions on movement and activity in Europe, and with higher prices in markets next year in the United States.

(Reporting by Tom Westbrook; Editing by Lincoln Fest.)

Add a Comment

Your email address will not be published. Required fields are marked *