Global markets wobble, oil prices sink 5% after a new variant of Covid-19 appeared

The global market wobbles, oil prices “sink” 5% after the appearance of a new Covid-19 variant

Asset markets around the world simultaneously “red floor” in the last trading day of the week after a new variant of Covid-19 with a spike higher than Delta was detected in South Africa.

US crude oil price fell more than 6.2% to 73.58 USD/barrel in morning session of November 26. Photo: AFP

Oil, stocks, and virtual currencies all fell

On 11/26, The World Health Organization (WHO) opened a special meeting to evaluate B.1.1.529 – a new variant of Covid-19 that has just been reported by South African scientists that it contains more than 30 mutations in spike protein. This amount of mutations is significantly more than the dangerous Delta variant that is dominating the globe.

Europe’s Stoxx 600 index fell 2.4% in mid-morning session on November 26 as two groups of banking and tourism stocks suffered heavy losses and oil and gas stocks also slipped along with oil prices.

The price of Brent crude oil for delivery futures slid 5.3% to $77.89/barrel in the morning session of November 26 in Europe, while the price of US crude oil dropped more sharply by 6.2%, to 73 .58 USD/barrel.

US stock futures also fell sharply, significantly Dow Jones industrial average futures contract “evaporated” more than 800 points. Similarly, major stock markets in the Asia-Pacific also slid, with Hong Kong’s Hang Seng index and Japan’s Nikkei 225 index both down more than 2.5%.

Bad news about the pandemic also poured cold water on the US bond market. The yield on the 10-year US Treasury note fell more than 11 basis points to 1.5277% as of 4 a.m. ET, while the yield on the 30-year bond slipped to 1.8798%. Meanwhile, spot gold price still inched around $19 to $1,808 per ounce.

Variant B.1.1.529 was detected in a tourist from South Africa undergoing isolation in a hotel in Hong Kong, while the remaining travelers with the group were isolated for monitoring.

In the latest move, the UK government has just issued a ban on flights from South Africa and Botswana (where new variant infections have been recorded), along with Eswatini, Lesotho, Namibia, and Zimbabwe, since noon. November 26 to 4:00 a.m. on November 28. After that time, travelers from the above countries entering the UK must undergo a period of isolation Obligatory 10 days.

Virtual currency is also not immune to the impact of the new variant. Bitcoin, an asset that investors refer to as “digital gold” with its connotation as a safe-haven asset, has fallen 7% in the past 24 hours to $54,561, its lowest level since January. 8/10.

Cryptocurrency investors believe Bitcoin as a store of value and a hedge against inflation. However,To date, Bitcoin has slipped 20% from the mark 69,000 USD – level the highest price in trading history recorded earlier this month.

Other cryptocurrencies also fell sharply on the 11/26 trading day. Ether, the second most valuable cryptocurrency after Bitcoin, slipped more than 10% to $4,007, while XRP also lost 10% to around 95 cents.

Central banks are more cautious

According to Geoffrey Yu, senior market strategist at BNY Mellon, some markets believe that news of the new variant B.1.1.529 will give the US Federal Reserve a reason to pause its normalization plan. monetary policy normalization.

Mr. Geoffrey Yu said that the recent increase in the Covid-19 epidemic in Europe, even before the news of the B.1.1.529 variant, showed that “we will still have to deal with the problem. this issue for a while and the market will have a risk aversion because of the pandemic.”

And Mr. Emmanuel Cau, Head of European Capital Strategy at Barclays, said that after many major stock markets already hits or is close to hitting all-time highs, a downside correction seems “logical”.

“We think the rebound in growth and the patience of central banks will continue to provide a stepping stone over the medium term, while investors will have available capital to buy discount codes,” said Mr. Emmanuel Cau.

However, Barclays noted, it is more important now to find out whether current vaccines are still effective against the variants. Uncertainty over outbreaks and vaccines could force central banks to be cautious.