SYDNEY/TOKYO – Asian stocks saw their sharpest decline in over three months, and oil prices plunged following the announcement of a vaccine-resistant variant of coronavirus. This sent investors scrambling to safety with the dollar, the yen, and bonds. [MKTS/GLOB]

Although little is known about the variant that was found in South Africa and Botswana, it is believed to have unusual mutations which may allow it to bypass immune systems or be more transmissible.

TAKASHI HIROKI CHIEF STRATEGIST MONEX TOKYO

Markets are now at risk from this variant. It is not yet known how it will be able to evade vaccines.

RAY ATTRILL HEAD OF FX STATEGY NAB, SYDNEY

The uncertainty surrounding what it means is causing people to react with fear. This kind of news is a good example for how to shoot first, and ask questions later.

MOH SIONG SIM CURRENCY AnalyST, BANK of SINGAPORE

“We don’t have a good idea of how dangerous the virus might be. It’s still a mystery. If vaccines fail, markets are expecting another wave of infection.

“Reopening hope could be undermined.”

MARK ARNOLD, CIO, HYPERION ASSET MANAGEMENT, BRISBANE

“I do not believe that there will be any return to pre-COVID. The only thing that will happen is mutations over time, which will change how people work in the economy. It’s just a fact.

SHINICHIRO KADOTA SENIOR X STRATEGIST BARCLAYS TOKYO

“We believe Germany is considering a lockdown. So this new variant of the COVID situation and flare up in it pose some risk to market sentiment.

The dollar-yen may fall further if the COVID situation becomes worse, however, the monetary policy divergence will continue to weigh on the yen over the medium-term.

MARTIN WHETTON – HEAD OF FIXED INSCOME, CBA. Sydney

“Watch out for the COVID-19 version. Although none of us are experts in virology, we all have witnessed the effect it has on central bank policies and the markets.

JEFFREY HALLEY ANALYST OANDA JAKARTA

The UK has stopped flights to South Africa from five of its neighbouring countries and can expect even more. It is a harsh lesson that the complacency shown by the rise of the Indian delta variant was a sign of weakness.

The one thing that can truly stop the recovery of the world has been the new COVID-19 strain. It swept the globe and led to mass social retractions. We know that the B.1.1.529 mutation is highly mutated and markets do not take chances.