Asian stock markets collapse as traders watch virus cases in Europe
NEW YORK (AP) – Shares close sharply lower on Wall Street on Friday, after a variant of the coronavirus from South Africa appears to be spreading across the world and the European Union has offered to suspend travel by plane from southern Africa. The Dow Jones Industrial Average lost 905 points. The S&P 500 Index fell 2.3%, its worst day since September, and the Nasdaq composite also saw its worst drop in two months. Travel and energy documents are among the biggest losers, with Royal Caribbean, Carnival and Norwegian Cruises over 10%. The New York Stock Exchange closes early at 1 p.m. EST.
THIS IS A CURRENT UPDATE. AP’s previous story appears below.
Shares fell sharply on Friday as the Dow Jones Industrial Average briefly fell more than 1,000 points as a new variant of the coronavirus first detected in South Africa appeared to spread across the world. This has added to investor uncertainty over the possibility of reversing months of progress in bringing the COVID-19 pandemic under control.
The S&P 500 was down 2.3%, on its worst day since February. Airlines and other travel stocks sank as health officials in Europe and the UK quickly offered to suspend air travel from southern Africa. The price of oil fell more than 13% amid fears of a further slowdown in the global economy.
Blue chips were down 950 points at midday to 34,857. The Nasdaq Composite was down 2%.
“Investors are likely to shoot first and ask questions later until more is known,” Oanda’s Jeffrey Halley said in a report. This is clear from the action in the bond market, where the yield on the 10-year Treasury bill fell to 1.51% from 1.64% on Wednesday. As a result, the banks suffered some of the heaviest losses. JPMorgan Chase lost 4%.
There have been other variants of the coronavirus – the delta variant has devastated much of the United States throughout the summer – and investors, officials and the general public are nervous about any new variant that spreads. It has been almost two years since COVID-19 emerged, killing more than 5 million people worldwide so far.
Health officials in Europe and the UK were quick to suggest suspending air travel from southern Africa. Meanwhile, cases of the variant have been found in Hong Kong, Belgium and Tel Aviv as well as major South African cities like Johannesburg.
The economic impacts of this variant are already being felt. Flights between South Africa and Europe were under quarantine or were completely closed. Airlines shares were quickly sold, with Delta Air Lines, United Airlines and American Airlines falling more than 10% each.
The VIX, the measure of market volatility, sometimes referred to as the market’s “fear gauge”, is a sign of the fear that Wall Street has become. The VIX jumped 49% to 27.75, its highest value since January before the vaccines began to be widely distributed.
Fearing more blockages and travel bans, investors have shifted money to companies that have profited greatly from previous waves, like Zoom Communications for meetings or Peloton for home exercise equipment. Peloton shares were up 4% while Zoom was up around 9%.
Shares of coronavirus vaccine makers were also among the biggest winners. Pfizer stock rose nearly 5% while Moderna stock jumped 23%.
Merck shares, however, fell 4%. While U.S. health officials have said Merck’s experimental treatment for COVID-19 is effective, data has shown the pill is not as effective in keeping patients out of hospital as it is. originally thought in the data.
Investors fear that the supply chain problems that have plagued global markets for months are getting worse. Ports and freight stations are vulnerable and could be closed by further localized epidemics.
“Supply chains are already stretched,” said Neil Shearing, economist at Capital Economics in London. “A new, more dangerous wave of the virus could cause some workers to temporarily leave the workforce and deter others from returning, thus exacerbating current labor shortages.”
The variant also puts more pressure on central banks, which already face a difficult dilemma of whether and when to raise interest rates to fight rising inflation. “The threat of a new, more serious variant of the virus may be a reason for central banks to postpone interest rate hike plans until the situation becomes clearer,” Shearing said.
Trading in stocks on the Friday after Thanksgiving is typically the slowest day of the year, with the market closing at 1 p.m. EST. Light trading could exacerbate Friday’s losses with fewer buyers and sellers.
Wiseman reported from Washington.
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