Stocks sink on fears of COVID-19 variant; S&P drops 1.4%

Shanghai, Frankfurt and Hong Kong also declined sharply. Futures for the Dow Jones Industrial Average dropped more than 2per cent.Some European countries already tightened anti-virus controls this week after their own case numbers spiked.

Dow drops 800 points at open, Europe, Asia markets fall sharply, oil down 7% as new COVID-19 variant rattles investors NEW YORK
Dow drops 800 points at open, Europe, Asia markets fall sharply, oil down 7% as new COVID-19 variant rattles investors NEW YORK

Global stocks and oil prices tumbled Friday after South Africa found a fast-spreading coronavirus variant and the European Union proposed suspending air travel from southern Africa.London’s benchmark fell 3per cent and Tokyo lost 2.5per cent. Shanghai, Frankfurt and Hong Kong also declined sharply. Futures for the Dow Jones Industrial Average dropped more than 2per cent.Some European countries already tightened anti-virus controls this week after their own case numbers spiked.

Austria imposed a 10-day lockdown, while Italy restricted activity by unvaccinated people. Americans were advised by their government to avoid Germany and Denmark.The 27-nation EU proposed the travel suspension to member governments after South Africa said the variant was spreading in its most populous province. Britain banned flights from South Africa and five nearby countries.“Investors are likely to shoot first and ask questions later until more is known,” Jeffrey Halley of Oanda said in a report.

That was evident from the action in the bond market, where the yield on the 10-year U.S. Treasury note fell to 1.54per cent from 1.64per cent on Wednesday. The bond market was closed Thursday in the U.S. for Thanksgiving.In midday trading, the FTSE in London fell to 7,099.69 and the DAX in Frankfurt lost 3.1per cent to 15,429.26. The CAC in Paris plunged 3.8per cent to 6,805.72.

On Wall Street, the future for the benchmark S&P 500 future lost 1.7per cent and the futures for the Nasdaq slipped 1per cent. U.S. markets were closed Thursday and are due to reopen Friday for a shortened trading session.In Asia, the Shanghai Composite Index lost 0.6per cent to 3,564.09 and the Nikkei 225 in Tokyo declined to 28,751.62. The Hang Seng in Hong Kong tumbled 2.7per cent to 24,080.52.

Investors already were more cautious after Federal Reserve officials said in notes from their October meeting released this week they foresaw the possibility of responding to higher inflation by raising rates sooner than previously planned.Investors worry central bankers might feel pressure to withdraw stimulus earlier than planned due to stronger-than-expected inflation.

The Fed said earlier it foresaw keeping rates low until late next year.Financial markets had been encouraged by strong U.S. corporate earnings and signs the global economy was rebounding from last year’s history-making decline in activity due to the pandemic. Stock prices have been boosted by easy credit and other measures rolled out by the Fed and other central banks.In energy markets, benchmark U.S. crude fell USD4.22, or 5.4per cent, to USD74.17 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oils, shed USD4, or 4.9per cent, to USD76.92 per barrel in London.

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