Stocks, Europe and China fall as COVID variant spreads

Stocks, Europe and China fall as COVID variant spreads

A look at the day ahead from Dhara Ranasinghe, according to Reuters.

COVID 19, a worry that investors had pushed down their list of top concerns in recent months, has soared back to the number one spot as a new variant spreads across South Africa.

Europe and the U.S. stock futures are down sharply, oil prices drop almost three-quarters of a percent, and the safe-haven yen is up almost three-quarters of a percent, and U.S. Treasury yields are down almost 10 basis points.

Shorter liquidity following Thursday's U.S. Thanksgiving Day holiday likely exacerbates price moves for sure, but there's little doubt overnight headlines have taken markets by surprise on Friday.

The variant, detected in South Africa, Botswana, and Hong Kong, has an unusual combination of mutations that may be able to evade immune responses or make it more transmissible.

That poses a new challenge for central banks such as the European Central Bank, which has just started to acknowledge that a push in inflation is longer than anticipated.

There are other reasons for unease, some warnings about the Fed rate hike expectations, Ukraine Russia tensions that has a broader geopolitical ramifications and a property-led slowdown in China, as well as the latest COVID headlines.

The rand breaches the 16.00 level to the dollar for the first time this year in emerging markets, from Turkey to South Africa.

Key developments that should give more direction to markets on Friday:

Japan PM Kishida urges companies to raise wages by 3% or more.

China Evergrande soccer stadium taken over by government source.

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