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New Covid-19 Strain, Markets Tumble, Black Friday

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© Reuters

Geoffrey Smith 

Investing.com — The world’s risk assets are falling after South Africa discovered a new, highly-mutated Covid-19 virus. This strain appears to have eliminated the Delta variant from the areas where it was found. WHO will call an emergency meeting to discuss whether this variant is ‘of concern. Among the most affected asset classes are equities, emerging markets currencies, crypto, and oil. This news casts a shadow on this year’s Black Friday. What you should know regarding Friday, 26th of November’s financial markets.

1. A new strain of Covid-19 has been identified

South African health officials discovered a new Covid-19 strain, raising concerns that the virus may not be immune to the existing vaccines.

It was quickly identified as 1.1.529 and became the predominant strain in South Africa. To determine if the strain is a concern variant, Friday’s emergency meeting of the World Health Organization was called. If so, it will be given the name of the Greek letter ‘nu’.

The strain has been detected in Hong Kong in two cases, both in people who have recently traveled to south Africa. The disease may be more deadly than the delta version, but it is still not known. However, it is possible that the threat of suffering from the disease will increase if a new strain emerges at a time where Europeans are experiencing record-breaking numbers.

2. Fears of a new wave lockdown are causing markets to tumble

Global news saw risk assets suffer, and European stock indices plummeted more than 4 percent in certain cases. However, they did manage to stabilize a little.

Pandemic trading quickly returned to equities. Travel and hospitality stocks did the worst while health and electronic commerce stocks were performing well.  The dollar was pushed into yet another steep repricing by interest rates risk. However, currencies other than the dollar, such as the Swiss franc and Swiss yen, outperformed. Soputh

Forcible liquidations also affected crypto currencies. The price of crypto currencies had declined 5.4% in seven weeks, falling 6.9%, 7.8% and 6.2% by 6:xx am ET.

3. Stocks in the United States are set for a sharp sell-off

U.S. stock exchanges will open later and with lower liquidity. The pressure is on all travel stocks, including Boeing (NYSE:), which fell 6.4% premarket and AirBNB stock, down 6.9%, and Marriott stock, down 7.2%. Stocks of cruise and airline lines are down between 7 and 12 percent.

At 6:15 am ET, they had dropped 812 points (or 2.3%), while the 1.9% and 1.3% were still down.

This news was also good for financial stocks and reduced the chance of the Federal Reserve increasing interest rates. These early pandemic trades, which were shorted aggressively in light of the improving economic outlook over recent months, have been among the biggest losers.

4. Black Friday: The best deals 

Covid-19’s new shadow casts yet another shadow over an already subdued Black Friday.

With many stores having stayed closed on Thursday and others reluctant to encourage crowds of shoppers to pack into stores, it’s not at all clear how the coming weekend for sales will shape up relative to previous ones. Various retailers, especially in fashion, saw their stocks plunge after warning of inventory shortages and supply chain constraints in their September/October quarter earnings, and the Wall Street Journal cited Adobe (NASDAQ:) data on Friday suggesting that digital ‘out of stock’ messages are up more than 260% from their levels of two years ago.

After months of reducing their savings due to the pandemic, Black Friday arrives this year. Although personal spending was strong, it rose 1.3% for the month in October. This is its largest monthly increase since March.

5. Fears of a new setback in air travel are fuelled by oil slide

The news prompted renewed concerns that the new mobility restrictions would affect a still recovering aviation market, and perhaps more local travel as well. Crude oil is also expected to experience its worst day in July.

Air travel, which represents the largest portion of oil demand that is clearly below 2019 levels, is expected to rebound.

While the European Union has already banned South African flights, and the U.K. is imposing a ban on a select few south African countries,

Futures had fallen 6.8% by 6:30 AM ET to $73.06/barrel. This was after they hit a two month low. Futures dropped 5.9% to $77.33/barrel earlier.

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