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SOME TRAVEL STOCKS BACK TO NOVEMBER 2020 LOWS (0908 GMT)
The new virus variant sends jitters across financial
markets, driving European stocks down, with pandemic sensitive
stocks leading losses.
The Stoxx 600 index is down 2.9%, with travel and
leisure stock index falling 4.6% to its September low.
Some stocks in travel companies, such as British Airways
owner IAG, Lufthansa, Tui, hit lows
close to levels not seen since November 9 2020, when the vaccine
breakthrough was announced.
The oil and gas stock index is down 4.7% as crude
prices plunged amid concerns about the pandemic and oil surplus.
Banks are badly hit as bond yields are falling while markets
pare back expectations for the pace of potential rate hikes in
the United States. The bank Stoxx index is down 4.9%.
Analysts from Raymond James wonder if this may yet prove to
be yet another "Covid scare", but they also recall that UK and
Israeli authorities are taking the news seriously enough to ban
flights from the region, effective from today.
They add risk assets were already jittery in response to
rising inflationary pressures and some hawkish commentary from
central banks.
(Stefano Rebaudo)
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IT'S LOOKING LIKE A BLACK FRIDAY (0833 GMT)
COVID-19, a worry that investors had pushed down their list
of top concerns in recent months, has soared back up to the
number one spot as a new variant spreads across South Africa.
Asia stocks outside Japan slid over 2%, Europe and U.S.
stock futures are down sharply, oil prices drops almost 3.5%,
the safe-haven yen is up around three-quarters of a percent, and
U.S. Treasury yields are down almost 10 basis points.
Thin liquidity following Thursday's U.S. Thanksgiving Day
holiday likely exacerbates price moves for sure, but there's
little doubt overnight headlines have taken markets by surprise
on Friday.
Little is known of the variant, detected in South Africa,
Botswana and Hong Kong, but scientists reckon it has an unusual
combination of mutations and may be able to evade immune
responses or make it more transmissible.
The news comes as Europe already battles a resurgent
COVID-19 outbreak, triggering fresh restrictions that raise
uncertainty over the near-term economic outlook.
That poses a fresh challenge for central banks such as the
European Central Bank, which has just started to acknowledge
that a push in inflation is lasting longer than anticipated.
And on top of the latest COVID headlines, there are other
reasons for unease, some warn -- the general lift up in Fed rate
hike expectations, Ukraine/Russia tensions that has broader
geopolitical ramifications and a property-led slowdown in China.
In emerging markets, the spotlight passes from Turkey to
South Africa for now as the rand breaches the 16.00 level to the
dollar for the first time this year.
Key developments that should provide more direction to
markets on Friday:
- ECB speakers: ECB President Christine Lagarde
- BOE chief economist Huw Pill speaks
- Q4 Canadian Survey on Business Conditions
- Japan PM Kishida urges companies to raise wages by 3% or more
- China Evergrande soccer stadium taken over by government
-source
- China asks Didi to delist from U.S. on data security fears -
Bloomberg News
(Dhara Ranasinghe)
*****
A NEW VIRUS VARIANT HITS EUROPEAN STOCKS (0721 GMT)
European stocks are set to open sharply lower as a rush to
safety and a massive drop in risk assets spread across the globe
on more virus concerns. Stock futures predict a more than 2%
drop at opening trades.
South African scientists have detected a COVID-19 variant
with a "very unusual constellation" of mutations, which could
help it evade the body's immune response and make vaccines less
effective.
U.S. Treasury yields drop 9 basis points, and Fed funds
futures rallied as markets pare back expectations for the pace
of potential rate hikes in the United States.
Meanwhile Brent crude futures fall below $80 a barrel, amid
concerns about the pandemic and oil surplus.
(Stefano Rebaudo)
*****