All eyes were on the opening bell for the US markets, who were due to return from the holiday for a shortened trading session. Futures signalled the rout that started in Asia and spread to Europe won't spare New York equities. A surge in Treasuries indicated traders were cutting bets on the Federal Reserve's monetary tightening. The dollar missed a beat as a haven currency as the yen dominated that role. We apologize, but this video didn't load.
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Frederik Hildner, a money manager at Salm-Salm Partner, said every trader in New York will be rushing to the office. The World Health Organization and scientists in South Africa were said to be working at lightning speed to determine how quickly the B was going to go. It is possible that the variant 529 can spread and whether it is resistant to vaccines. The new threat adds to the wall of worry investors are already contending with in the form of elevated inflation, monetary tightening and slowing growth.
The S&P 500 Index and the Dow Jones Industrial Average have slumped the most since September. Russell 2000 contracts sank by 5.4 per cent. Technology shares may also be caught in the net as Nasdaq 100 futures fell 1.2 per cent. Europe's equity benchmark was heading for the biggest drop in 13 months. Since investors rush for safety in March 2020, the ten-year Treasury yields fell 10 basis points, while the Japanese yen jumped the most since. After the European Union, U.K. Israel, and Singapore imposed emergency restrictions on passengers from South Africa and the surrounding region, global travel stocks were in particular focus. British Airways parent IAG SA fell 21 per cent in London. Carnival Corp. and Royal Caribbean Cruises Ltd. lost 11 per cent each in the New York premarket session. Stay-at- home stocks such as Zoom Video Communications Inc. jumped in the early trading.
It is terrible news, Ipek Ozkardeskaya, senior analyst at Swissquote, said in emailed comments. The new COVID variant could hit the economic recovery, but this time the central banks won't have enough margin to act. They can't fight inflation and boost growth at the same time. Traders were trying to cut back their bets on rate hikes. Money markets are now priced less than a 10 basis point hike by the Bank of England next month, compared to 35 basis points projected less than a month ago. They expect to see seven basis points of tightening by the European Central Bank by December 2022, against nine basis points seen Thursday. The yen and Swiss franc found bids from safety conscious traders while the dollar languished. A gain for the euro, the biggest component of the Bloomberg Dollar Spot Index, curbed the dollar.
The Asia-Pacific equity gauge of MSCI Inc. fell to the lowest since October, with Japan and Hong Kong gauges dropping at least 2 per cent each. Some of the worst-hit assets were in emerging markets. The South African currency, where the strain of the virus was identified, sank 2.1 per cent and the Mexican peso fell by a similar degree. The MSCI EM Currency Index fell to a six week low. The Tesla-Financial Complex'': how carmaker gained influence over markets.
Bond bulls hold their ground in the face of red-hot inflation.
In the long-awaited energy resurgence, eight oil companies are poised to storm back into main TSX index. Crude oil futures in New York dropped as much as 7.4 per cent to trade below US $73 per barrel. In London trading, copper, nickel and aluminum declined by at least 3.4 per cent.
Some investors said it's important not to get carried away by short-term jitters, as the selling continued unabated. The markets have had a very strong run over the last 12 months and it is not surprising to see a reaction like this, said Dan Boardman-Weston, CIO at BRI Wealth Management. If this is going to take the world backward from a Covid perspective, then it is likely that inflation will abate and monetary policy will stay looser for a long time, which is a positive for markets in the medium term. Some of the biggest moves in markets are:
The Stoxx Europe 600 fell 2.8 per cent as of 10: 48 a.m. London time.
The futures on the S&P 500 fell by 1.9 per cent.
Futures on the Nasdaq 100 fell 1.2 per cent.
Futures on the Dow Jones Industrial Average fell 2.3 per cent.