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WASHINGTON / LONDON, Nov. 26 (Reuters) – Stocks fell on Wall Street on Friday as they reopened after Thanksgiving, while European stocks saw their biggest sell off in 17 months and oil prices plunged $ 10 the barrel due to fears of a new variant of the coronavirus sent investors rushing to safe-haven stocks.
The World Health Organization (WHO) on Friday designated a new variant of COVID-19 detected in South Africa with a large number of mutations as “of concern”, the fifth variant to receive the designation. Read more
Unofficially, the Dow Jones Industrial Average (.DJI) closed down 2.53% at 34,899.34, its biggest percentage decline in over a year. The S&P 500 (.SPX) lost 2.27%, its worst one-day decline since February 25, and the Nasdaq Composite (.IXIC) fell 2.23%, the largest one-day route in two months.
U.S. markets closed early Friday after being closed all day Thursday for the Thanksgiving holiday.
The benchmark STOXX 600 (.STOXX) ended down 3.7% on the day, leaving it down 4.5% for the week. The main stock market’s volatility gauge (.V2TX) hit its highest level in nearly 10 months.
Companies that had benefited from an easing of COVID restrictions this year, including AMC Entertainment (AMC.N), aircraft engine maker Rolls Royce (RR.L), easyJet (EZJ.L), United Airlines (UAL.O) and Carnival Corp (CCL.N) all fell.
Retailers plummeted as Black Friday, the start of the holiday shopping season, kicked off as the new variant fueled concerns over low traffic in stores and inventory issues. Read more
In Europe, the Travel and Leisure Index (.SXTP) fell 8.8% on its worst day since the massive sale of COVID-19 in March 2020.
“Ultimately this shows COVID is still the investor narrative, much of the movement today is driven by the South African variant,” said Greg Bassuk, CEO of AXS Investments in Port Chester , New York.
“We talked about four or five factors that have boosted activity over the past two months – inflation fears, some economic data, Fed policy – but what we’ve seen over the past year, c ‘is that the big developments regarding COVID have really ended up eclipsing some of these other factors to a large extent and that is what is driving market activity today. “
Little is known about the variant detected in South Africa, Botswana and Hong Kong, but scientists have said that it exhibits an unusual combination of mutations and may be able to evade immune responses or make the virus more transmissible.
Britain said the new variant was the most important variant to date and was one of many countries to impose travel restrictions in southern Africa. Read more
The European Commission has also said it wants to consider suspending travel from countries where the new variant has been identified, although the WHO has warned against the hasty imposition of such restrictions. Read more
Global stocks (.MIWD00000PUS) fell 1.81%, their biggest drop in more than a year. The French CAC 40 (.FCHI) lost 4.8%. The UK FTSE 100 (.FTSE) fell 3.6%, while the German DAX (.GDAXI) fell 4.2% and the Spanish IBEX (.IBEX) lost 5.0%.
Malaysian rubber glove maker Supermax (SUPM.KL), which climbed 1,500% in the first wave of the pandemic, has jumped 15%.
The MSCI Asian Non-Japan Equity Index (.MIAPJ0000PUS) fell 2.44%, its biggest drop since late July.
In commodities, oil prices plunged. Gold prices have reversed earlier gains seen in the move away from riskier assets.
U.S. crude was last down 12%, at $ 69.02 a barrel at 1:21 p.m. EST (6:12 p.m. GMT). Brent crude fell 10.5% to $ 73.59.
Spot gold prices fell 0.09%.
As investors rushed to safe-haven assets, the Japanese yen rose 1.87% against the greenback, while the British pound last traded at 1.3331, up 0 , 08% on the day.
The dollar index fell 0.757%, with the euro up 1% to $ 1.1318.
Yields on US Treasury debt recorded their biggest drop since the start of the pandemic. 10-year Treasuries last rose to 1.4867%. The 2-year note rose for the last time to drop 0.4941%, from 0.644%.
“A flight to safety is underway with the 10-year US Treasury yield falling,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “The immediate cause of the sale is yesterday’s announcement of a new variant of COVID-19 in South Africa, which investors believe could weigh on economic growth.”
The market fluctuations come amid already growing concern about COVID-19 outbreaks resulting in restrictions on movement and activity in Europe and beyond. Read more
Markets were previously optimistic about the strength of the economic recovery, despite mounting inflation fears.
Reporting by Chris Prentice; Editing by Susan Fenton
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