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The new variant of COVID-19 affects global financial markets

The CAC 40 fell more than 4%, on the back of Asian stocks, while Europe already faces a particularly strong outbreak of COVID 19
The CAC 40 fell more than 4%, on the back of Asian stocks, while Europe already faces a particularly strong outbreak of COVID 19

The confirmation in South Africa of a new worrying variant of the coronavirus with mutations that, according to experts, mark a “great leap in the evolution” of the pandemic, it spreads its financial consequences in the global economy in the face of fear of new blockages.

All Asian stock markets closed in the red this Friday. The news generates alerts among investors. Oil plummets, and stock markets in Europe they fell by up to 4%, hitting mainly banks, companies in the tourism sector and raw materials.

In Asia, stock market indicators were in negative territory after the publication of studies warning against rapid spread in certain regions of the world, and particularly in South Africa, of the so-called “B.1.1.529”, potentially more contagious than the Delta variant, which unbalanced the world in recent months.

The index Nikkei 225 of Tokyo closed with a fall of 2.53%, after losing more than 3% during the session. On Hong Kong, at the beginning of the afternoon, the Hang seng lost 2.2%, while the KOSPI from South Korea lost 1.3%. Meanwhile, in Shanghai, Mumbai and Taipei the trend was also negative.

The spread of this new variant increases the fear of the adoption of more severe restrictions to try to stop an uncontrollable escalation of infections. The idea of ​​repeating confinements like the one decided by Austria, flies over Europe. Germany, the main economy of the continental bloc, is studying to tighten the restrictions even more. Portugal, one of the member states with the highest vaccination rate, has just decided a one-week blockade for after Christmas.

With this scenario, economic forecasts weaken, and with it, expectations of improvements in business balance sheets, one of the main drivers of the improvement in the stock market in recent months, for some, post-pandemic recovery.

“Because they have the Delta wave in mind at the beginning of the year, investors tend to shoot first and ask questions later, until they learn a little more,” he summed up to the trade press, Jeffrey halley, OANDA Senior Market Analyst for Asia Pacific, to justify the blow of stress in the markets.

A worsening of the pandemic not only suggests that a slowdown in growth in the world economy could return.  Inflationary tensions persist and add more tension to the markets.
A worsening of the pandemic not only suggests that a slowdown in the growth of the world economy could return. Inflationary tensions persist and add more tension to the markets.

The President of the EU Commission, Ursula von der Leyen, anticipating that the European Union aims to stop air travel from the southern region of Africa, confirmed this morning the blow for the commercial aerospace sector.

“The Commission will propose, in close coordination with the Member States, to activate the emergency brake to stop air travel from the southern African region due to variant of concern B.1.1.529,” he said via his Twitter account .

Investors punished, in the course of Friday’s day in Asia, the airlines that would suffer a possible return of the lockdown sequences or the reestablishment of travel restriction measures. On Tokyo, the actions of Japan Airlines and ANA Holdings they fell 6.1% and 5.3%, respectively. In Hong Kong, Cathay Pacific, meanwhile, fell 3.7%.

The oil sector is also prey to fears. Financial centers anticipate that the restrictions would automatically reduce crude consumption. The price of a barrel also fell 2% in Asia on Friday, reaching $ 80.11.

On London, one of the most important financial centers in the world, the panorama was also repeated. In fact, the British press reflected scientific concern in the business journals. The chief medical advisor of the UK Health Security Agency warned that the new variant is the most “complex” and “worrisome” seen so far.

The FTSE 100 It fell more than 3% when the market opened on Friday morning, reflecting the fears. Shares of major airlines plummeted with IAG, the owner of British Airways, falling more than 21% in early trades, while EasyJet plunged 16%. The engine manufacturer Rolls-Royce and the oil giants BP and Shell they were also among the great backsliders.

The evocation of an epidemic panorama such as the one supported by the spread of the Delta variant, also pushes financial specialists to direct their investments towards currencies considered safe.

The yen, the Japanese currency, gained just over 0.6% against the dollar, which also added concern to the exports of that country. The automaker Toyota, the world’s largest automaker, and its competitor Honda lost nearly 2%.

Finally, a worsening of the pandemic not only suggests that a slowdown in the growth of the world economy could return. Inflationary tensions persist. One of the data of the day, which analysts are watching closely, is that of German import prices. The year-on-year rise has accelerated to 21.7%, above the 19.6% predicted by specialists.

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HELEN HERNANDEZ

Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Helen@oicanadian.com Phone : +1 281-333-2229

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