Global markets were jolted on Friday by the discovery of a new coronavirus variety in South Africa, which fueled fears that further growth-stifling lockdowns might be enforced if the type spreads extensively.
Due to the Thanksgiving holiday in the United States, trading volumes were low, which may have increased the volatility.
Major benchmarks, on the other hand, plunged severely during the holiday-shortened session, with the Dow (DJI) losing more than 900 points, its worst day of the year, and the third biggest Thanksgiving selloff ever. Meanwhile, the S&P 500 (GSPC) lost almost 2%, the most since February, and the Nasdaq (IXIC) also fell substantially, but its losses were somewhat offset by a surge in stay-at-home firms.
An unknown coronavirus variety has been detected in South Africa, prompting the World Health Organization to convene an emergency meeting. The new B.1.1.529 strain, dubbed "Omicron," is causing alarm among scientists since it has a huge number of mutations present in earlier variations, including the fast-growing Delta variant that burst during much of the summer, and it appears to be swiftly spreading.
Despite the lack of proof, health experts are concerned that the evolving variety may dilute or resist vaccination effectiveness.
In a note, Neil Shearing, Group Chief Economist at Capital Economics, wrote, "It goes without saying that it's still too early to judge just how large a threat the new B.1.1.529 strain offers to the world economy."
However, "The last few years have shown us that the limits implemented in reaction to the virus, rather than the virus itself, inflict the majority of the economic harm. If the B.1.1.529 strain spreads, the main question is how governments would respond" Shearling authored the piece.
"How far it escapes vaccines and, more importantly, causes strains in national healthcare systems," he added, emphasizing that governments in the United States and the United Kingdom have taken a "learn to live with the virus" approach, and are thus far less likely than governments in other regions to impose new restrictions.
BioNTech (BNTX) said on Friday that it anticipates further data on the novel coronavirus strain in South Africa in two weeks, which would help it rework its injections, and that the business and its vaccine partner, Pfizer (PFE), might redesign the vaccine in six weeks, to distribute it in 100 days.
Pfizer's stock jumped as much as 8% to a new high, indicating that the new variety might boost vaccination demand.
While COVID-19 worries dominated investor attention for much of 2020 and 2021, Citi analyst Andrew Baum reports that Pfizer confirmed it can develop a variant vaccine in 100 days and four billion doses in the first year.
Early Friday, travel and leisure-related companies were among the toughest hit, with Carnival Corp (CCL) and Royal Caribbean (RCL) both down 10% in premarket trade. United Airlines (UAL), Delta Air Lines (DAL), and American Airlines (AA) all saw their stock prices fall by 7%. Boeing's stock dropped 6%. Marriott International and Hilton Worldwide both saw their stock prices drop by more than 5%.
Expedia (EXPE) was the S&P 500's sixth-worst performance, losing 11 percent during the abbreviated trading day, while Airbnb (ABNB) was down more than 5%.
Stay-at-home companies, on the other hand, increased by 9%, with Zoom (ZM) up 9% and Netflix (NFLX) up 2%.
Oil prices also plummeted to their lowest levels in more than two months on Friday, raising concerns about a demand slowdown.
On projected worries of diminishing demand amid the new version, U.S. oil fell 10% to its lowest level since April 2020, with U.S. crude futures down 6.2 percent to $73.57 per barrel.
Bond rates have also dropped as investors' worries about inflation gave way to a demand for safe-haven assets. After closing at 1.63 percent on Wednesday, the yield on the benchmark 10-year US Treasury note fell to 1.53 percent.
On Friday, ProShares' Simeon Hyman told Yahoo Finance Live, "We're still in a situation where rates are so low that the safe haven of bonds isn't as safe as it appears." "You're not earning a lot of money today on that small amount of treasury rally, so it's a tricky place."
As bond yields fell, banks, which benefit from higher interest rates, were hit hard. Bank of America is down 5.8%, Wells Fargo is down 6.3%, Citigroup is down 4.8 percent, JPMorgan is down 4.7 percent, Goldman Sachs is down 3.9 percent, and Morgan Stanley is down 4.9 percent.
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