Stocks tumble, oil prices slump amid concerns over new virus variant
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Share prices of airlines and tourism groups dived as countries put in new travel restrictions, while there were big losses also for energy groups.
Stock markets and oil prices plunged Friday over fears of a new coronavirus variant that scientists warn could be more infectious than Delta and more resistant to vaccines, potentially dealing a heavy blow to the global economic recovery.
Haven investments the yen and Swiss franc rallied but the dollar floundered.
Share prices of airlines and tourism groups dived as countries put in new travel restrictions, while there were big losses also for energy groups.
"Stock markets fell sharply... as fears a new Covid variant will lead to fresh lockdowns, mobility restrictions and lower economic growth," noted Neil Wilson, chief market analyst at Markets.com.
Europe's main equity markets were down at least three percent in afternoon trading following sharp falls in Asia.
On Wall Street, the Dow slumped 2.5 per cent in its shortened trading day following Thursday's Thanksgiving holiday.
US crude oil prices tumbled 10 per cent, with the main international contract down over nine per cent.
"It's Black Friday today for the retailers, but it's 'Red Friday' right now for the stock market," said Patrick O'Hare at Briefing.com.
Justin Tang at United First Partners said that while the latest news was worrying, "the world has gone through this before" with the Delta variant, adding that governments were more adept at knowing how to deal with the situation.
"Mutations are expected and not something unknown," he said.
The World Health Organization cautioned against imposing new travel restrictions over the new Covid-19 variant B.1.1.529.
It added that it would take "a few weeks" for researchers to understand the impact of the variant detected in South Africa.
Germany's BioNTech said it was studying how well the coronavirus vaccine it developed with US drugs giant Pfizer protects against the new variant.
"We expect more data from the laboratory tests in two weeks at the latest. These data will provide more information about whether B.1.1.529 could be an escape variant that may require an adjustment of our vaccine if the variant spreads globally," a BioNTech spokesperson said.
Belgium later reported the first case of the variant in Europe.
Traders were keeping a wary eye also on the Federal Reserve as the US central bank considers its next moves to fight soaring global inflation, which is an additional threat to economic recovery.
Some officials at the bank have flagged a quicker pace of tapering the Fed's vast bond-buying stimulus programme, with a hike in US interest rates coming possibly in the middle of next year.
"The increased openness to accelerating the taper pace likely reflects both somewhat higher-than-expected inflation over the last two months and greater comfort among Fed officials that a faster pace would not shock financial markets," Goldman Sachs said in a note to clients.
However, Briefing.com's O'Hare said the emergence of the new variant, if it is confirmed to be more transmissible and evade current vaccines, could change the view on the Fed's move.
"The manner in which the B.1.1.529 variant evolves, though, could potentially change the market's perspective on the matter," he said.
"Certainly, in the heat of today's headline moment, there will be added concern about the Fed making a policy mistake" if it accelerates the tapering of its stimulus programme.