Asian stocks suffered their steepest decline in three months and European stocks plunged more than 3% on Friday as reports of a recently identified and possibly vaccine-resistant variant of coronavirus drove investors away from riskier assets.
Asian and European countries rushed to tighten restrictions on Friday after a new, possibly vaccine-resistant variant of the coronavirus was detected in South Africa, and Singapore and India announced stricter border controls and more rigorous testing.
Black Friday – Cyber Monday
Sign up for our annual subscription and get full access to our award-winning articles, market indicators, and data tools.
R630 R530 *
SAVE R226 vs monthly subscription.
* Valid until November 29, 2021. Terms and conditions apply.
Susannah Streeter, Senior Market and Investment Analyst, Hargreaves Lansdown:
“Fear has gripped the financial markets with the travel industry flying into another violent storm, following the discovery of a new strain of COVID that could be much more contagious and may make vaccines less effective.”
Peter Chatwell, Director of Multi Asset Strategy at Mizuho International:
The European lockdowns alone would have meant mild GDP growth in the fourth quarter, but a rebound in the first quarter. The United States, the United Kingdom and Asia did not seem affected by the problem in Europe. If the new variant offers its potential (usurping Delta and reducing the efficacy of the vaccine), we should think about a soft / flat fourth and first quarter GDP growth globally. The effectiveness of the vaccine will determine the severity of the blockages and, therefore, if this turns into another recession.
RBC Capital Markets, Europe:
It is the threat of the escape of the vaccine that provokes the reaction of the market both in stocks (down) and bonds (up). As long as the markets face a familiar virus situation that can be overcome with a sufficiently elaborated and executed vaccination strategy, the reactions will be tempered, as we have seen with the poor recovery of the bond market last week when new closings were announced in Europe. . However, this new variant creates a potential threat to known responses and thus creates a more durable market response.
Holger Schmieding, Chief Economist at Berenberg:
At this stage, it is too early to assess the possible economic consequences. Any new wave could cause serious economic damage. As a potentially mitigating factor, the world is now on high alert and has increased its capacity to develop, adjust and produce vaccines.
Takashi Hiroki, Chief Strategist, Monex, Tokyo
“This variant is a new risk for the markets. We can’t say to what extent you can evade vaccines. ”
Ray Attrill, Head of Currency Strategy, National Australia Bank, Sydney
“People are reacting with uncertainty about what this means. You shoot first and ask questions later when this kind of news comes up. ”
Moh Siong Sim, Currency Analyst, Bank of Singapore
“We still don’t know how contagious the virus is… it’s a general uncertainty. Markets anticipate the risk of another global wave of infections if vaccines are ineffective.
“The reopening of hopes could be frustrated.”
Mark Arnold, CIO, Hyperion Asset Management, Brisbane
“I don’t think you can go back to the pre-COVID world. We are just going to have mutations over time and that will change the way people operate in the economy. That’s just reality. ”
Shinichiro Kadota, Senior Currency Strategist, Barclays, Tokyo
“We see that Germany is considering a lockdown, so this new variant and the outbreak in the COVID situation poses some risk to overall market sentiment.
“If the COVID situation worsens, then the dollar-yen could go down even further, but otherwise, the divergence of monetary policy will definitely weigh on the yen in the medium term.”
Martin Whetton, Chief Fixed Income Officer, CBA, Sydney
“Be on the lookout for the new Covid-19 variant. None of us are virologists, but we have all seen the impact this has had on the intended path of central bank policy and markets. ”
Jeffrey Halley, Analyst, Oanda, Jakarta
“The UK has stopped flights from South Africa and five other neighboring countries, and we can expect more of this elsewhere. The complacency observed with the appearance of the delta variant in India is a lesson that was hard learned.
“The only bull in China’s store that could really derail the global recovery has always been a new strain of Covid-19 that swept the world and caused the re-imposition of massive social retractions. All we know so far is that B.1.1.529 is heavily mutated, but markets are not taking chances. ”