Stock Markets Dip on Fear of New UK 'Strain' News

Published December 22nd, 2020 - 01:30 GMT
Stock Markets Dip on Fear of New UK 'Strain' News
The variant, which officials say is up to 70 per cent more transmissible than the original, also prompted concerns about a wider spread. (Shutterstock)
Highlights
Resurgent virus fears overshadow US stimulus agreement; oil slips
Stock markets across the globe, including most Middle Eastern share indices, suffered a dip on Monday as a fast-spreading new coronavirus strain in Britain stoked fears that a resurgence of the pandemic could derail the pace of recovery.
 

The variant, which officials say is up to 70 per cent more transmissible than the original, also prompted concerns about a wider spread.

Brent crude was down $2.23, or 4.3 per cent, at $50.03 by 1421GMT, while US West Texas Intermediate crude fell $2.21, or 4.5 per cent, to $46.89.

“The new strain of coronavirus in the UK has shown us that the vaccine optimism holding Brent above $50 per barrel could be deflated in a fleeting moment,” said Rystad Energy’s analyst Louise Dickson.

US stocks fell in early trade. At 1020ET, the Dow Jones Industrial Average was down 389.55 points, or 1.29 per cent, at 29,789.50, the S&P 500 was down 69.13 points, or 1.86 per cent, at 3,640.28, and the Nasdaq Composite was down 224.62 points, or 1.76 per cent, at 12,531.02.

The euro slipped to $1.2197 from $1.2262 as the dollar rose to ¥103.55 from ¥103.32 late on Friday. Bitcoin dropped as much as 5.1 per cent to $22,290 after hitting a record $24,299.75 on Sunday.

In the Middle East, Saudi Arabia’s benchmark index concluded 1.7 per cent lower. Dubai’s main share index closed 3.9 per cent lower, with Shariah-compliant lender Dubai Islamic Bank declining 4.5 per cent, while blue-chip developer Emaar Properties retreated 4.8 per cent.

The Abu Dhabi index fell 0.8 per cent, weighed down by a 3.1 per cent fall in Aldar Properties and a 4.6 per cent decline in Abu Dhabi Islamic Bank.

In Qatar, the index slipped 0.4 per cent, with Qatar Fuel shedding 2.6 per cent. Outside the Gulf, Egypt’s blue-chip index clawed back some losses to trade down 2.8 per cent.

Markets fell in Paris, London, Frankfurt, Mumbai and Tokyo but rose in Shanghai.

In Asia, flaring Covid-19 outbreaks have led authorities to impose lockdowns or other restrictions in Australia and Thailand.

In India, markets took a heavy pounding with the Sensex and Nifty falling three per cent each, snapping six days of gains. The Sensex slumped 1,406.73 points to close at 45,553.96 points while the Nifty ended 432.15 points at 13,328.40 points.

Tokyo’s Nikkei 225 index lost 0.2 per cent to 26,714.42, regaining some of its earlier losses after the cabinet approved a record annual budget of ¥106.6 trillion ($1.03 trillion) for the coming fiscal year.

In Hong Kong, the Hang Seng declined 0.7 per cent to 26,306.68, while Australia’s S&P/ASX 200 shed 0.1 per cent to 6,669.90.

South Korea’s Kospi recovered from early losses, gaining 0.2 per cent to 2,778.65. The Shanghai Composite index gained 0.8 per cent to 3,420.57.

Thailand’s benchmark SET index lost 3.2 per cent as a fresh outbreak of coronavirus cases clustered around a seafood market near Bangkok shook confidence in the country’s pandemic precautions.

In the US, passage by the Congress of the nearly $1 trillion Covid-19 economic relief package was expected later Monday. However, a resurgence of virus outbreaks around the globe has dented optimism that vaccines can bring a swift end to the pandemic.

US futures also weakened, with the contract for the S&P 500 down 0.6 per cent. The future for the Dow industrials dropped 0.5 per cent as the gloom over the outlook deepened with several nations banning flights from the UK.

Wall Street retreated on Friday, with the S&P 500 losing 0.4 per cent a day after it and other major indexes breached record highs.

Wall Street’s hope is that the stimulus for the economy might help carry it through a tough winter, until the widespread rollout of vaccines might bring relief.

But it will be months before most people can get the shots, and the pandemic is likely to do even more damage in the interim.

In the bond market, the yield on the 10-year Treasury slipped to 0.91 per cent from 0.94 per cent late Friday.

Germany’s DAX sank 2.0 per cent to 13,357.27 and the CAC 40 in Paris shed 2.6 per cent to 5,387.12. In Britain, where a strain of the coronavirus that is thought to be more easily transmissible has been spreading, the FTSE 100 gave up 1.4 per cent to 6,436.30.


Copyright © 2021 Khaleej Times. All Rights Reserved.

You may also like

Subscribe

Sign up to our newsletter for exclusive updates and enhanced content