Stocks lurch decrease, bonds bounce as virus variant spooks traders

  • MSCI AxJ drops 1.8%; S&P 500 futures down 1%
  • U.S. crude falls 2.5%
  • Bond rally drives 10-year Treasury yield down 8 bps

SYDNEY, Nov 26 (Reuters) – Stocks suffered their sharpest drop in three months in Asia on Friday and oil tumbled after the detection of a brand new and probably vaccine-resistant coronavirus variant despatched traders scurrying towards the protection of bonds, the yen and the greenback.

MSCI’s index of Asia shares outdoors Japan (.MIAPJ0000PUS) fell 1.8%, its sharpest drop since August. Casino and beverage shares offered off in Hong Kong, journey shares dropped in Sydney and Tokyo. Japan’s Nikkei (.N225) skidded 3% and U.S. crude oil futures fell 2.7% amid contemporary demand fears.

S&P 500 futures had been final down 1% and Euro STOXX 50 futures down 2%.

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Little is understood of the variant, detected in South Africa, Botswana and Hong Kong, however scientists mentioned it has an uncommon mixture of mutations and could possibly evade immune responses or make it extra transmissible. learn extra

British authorities assume it’s the most vital variant up to now, fear it might resist vaccines and have hurried to impose journey restrictions. learn extra

“You shoot first and ask questions later when this sort of news erupts,” mentioned Ray Attrill, head of FX technique at National Australia Bank in Sydney, because the information rattled forex merchants.

Bets on price hikes additionally retreated as Fed funds futures rallied and two-year Treasury yields fell 6 foundation factors, the sharpest drop since March 2020.

South Africa’s rand dropped greater than 1% to a one-year low on Friday and the risk-sensitive Australian and New Zealand {dollars} fell to three-month trough.

Japan and Australia every hinted at attainable border closures in response to the brand new variant. learn extra

“Markets are anticipating the risk here of another global wave of infections if vaccines are ineffective,” mentioned Moh Siong Sim, a forex analyst on the Bank of Singapore.

“Reopening hopes could be dashed.”

Equity promoting in Asia has world shares (.MIWD00000PUS), on track for his or her worst week since early October. Dow Jones futures fell 1% , whereas FTSE futures fell 1.9%.

Moves in Treasuries had been additionally sharp on the longer finish, with 10-year Treasury yields down eight bps to 1.5618% and 30-year yields down 7 bps to 1.8963%.

Though that leaves yields inside latest ranges, warmth has come out of wagers on the tempo of price hikes and the December 2022 Fed funds futures contract was final up 9 bps.

The yen jumped about 0.6% to 114.67 per greenback and the Aussie was final down 0.6% at $0.7141. The euro edged up 0.1% to $1.1221, as security relatively than coverage differentials drove commerce in Asia.

The strikes come in opposition to an already rising backdrop of concern about COVID-19 outbreaks driving restrictions on motion and exercise in Europe and past.

European international locations expanded COVID-19 booster vaccinations and tightened curbs in a single day. Slovakia introduced a two-week lockdown, the Czech authorities will shut bars early and Germany crossed the edge of 100,000 COVID-19-related deaths. learn extra

Shanghai on Friday restricted tourism actions and a close-by metropolis lower public transport as China doubles down on its zero-tolerance strategy that can also be unnerving merchants. learn extra

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Reporting by Tom Westbrook; Editing by Lincoln Feast.

Passersby wearing protective masks are reflected on an electronic board displaying stock prices outside a brokerage amid the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan, September 29, 2021. REUTERS/Issei Kato

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