Fear of new variant tumbles stocks and crude oil

New Covid variant B.1.1.529, which could be named Omicron has set an end to weeks of tranquil trading. On Friday, markets worldwide dropped sharply as the news of the most highly mutated new Coronavirus variant, found in South Africa, spooked the investors.  

As of 7:23 a.m, New York time, S&P 500 Index was down 1.67 percent. The Dow Jones Industrial Average dropped 2.22 percent, or 800 points, to its lowest level since September. Contracts in the Russell 2000 index fell as high as 5.4 percent. Nasdaq 100 futures tumbled 0.84 percent, suggesting that technology stocks may also get caught in the net. The Stoxx (SXXP) index of European stocks fell 2.51%.  

Travel stocks are meager due to the widespread dread of possible lockdowns and emergency limits placed on travelers from South Africa and the surrounding region. In London, IAG SA, the parent company of British Airways, fell as much as 21%. Carnival Corp. and Royal Caribbean Cruises Ltd. both fell 10% in premarket trading in New York. During the same time frame, the London FTSE 100 index fell 3%. 

The new variant news has also impacted the price of crude oil and other metals. Crude oil futures in New York fell as high as 7.4%, briefly trading below $73 a barrel. At $73.13, the US benchmark West Texas Intermediate is down 6.7 percent. In London trading, copper, nickel, and aluminum all fell by at least 3%.

“This is market’s way of expressing its worried about a slowdown in economic activity is the drop in oil price,” said Russ Mould, investment director at AJ Bell. Oil major BP’s stock fell 5.3 percent in London, while rival Shell’s stock fell more than 4%. 

Stay-at-home equities like Zoom Video Communications Inc., on the other hand, soared in early trading. Following the announcement, investors gathered around vaccine manufacturers. Moderna and Pfizer stocks increased by more than 8% and 5%, respectively. And Netflix’s stock was up 2%. 

The crypto market has also been hit by the rising fear of the covid variant. The market will close at 1 p.m. ET on Friday due to the holiday weekend and was closed on Thursday for Thanksgiving. 

The Special Meet 

The World Health Organization (WHO) will hold a special meeting on Friday to discuss the newly discovered variant of COVID, Omicron. On Friday, South African Health Minister Joe Phaahla warned about a new mutant with 32 mutations (twice the delta) in its spike protein. The B.1.1.529 SarsCov2 mutant, first identified in Botswana, has increased vaccine resistance and is responsible for the surge in Covid cases in southern Africa last week. 

 “There are fewer than 100 whole genome sequences that are available. We don’t know very much about this yet. What we do know is that this variant has a large number of mutations. And the concern is that when you have so many mutations, that can have an impact on how the virus behaves,” Infectious Disease Epidemiologist and COVID-19 Technical Lead at the WHO Maria Van Kerkhove said during a virtual Q&A session on Thursday.

Related Posts