“The threat of a new, more serious, variant of the virus may be a reason for central banks to postpone plans to raise interest rates until the picture becomes clearer,’’ Shearing said. The variant also puts more pressure on central banks that are already faced with a dilemma: whether and when to raise interest rates to combat rising inflation. “A new, more dangerous, virus wave could cause some workers to temporarily exit the workforce, and deter others from returning, making current labor shortages worse.’’ “Supply chains are already stretched,’’ said Neil Shearing, an economist with Capital Economics in London. Ports and freight yards are vulnerable and could be shut by new, localized outbreaks. Investors are worried that the supply chain issues that have impacted global markets for months will worsen. health officials said Merck's experimental treatment of COVID-19 was effective, data showed the pill was not as effective at keeping patients out of the hospital as originally thought. Pfizer shares rose more than 6% while Moderna shares jumped more than 20%. The coronavirus vaccine manufacturers were among the biggest beneficiaries of the emergence of this new variant and the subsequent investor reaction. One sign of Wall Street's anxiety was the VIX, the market's measurement of volatility that is sometimes referred to as its “fear gauge.” The VIX jumped 53.6% to a reading of 28.54, its highest reading since January before the vaccines began to be widely distributed.įearful of more lockdowns and travel bans, investors moved money into companies that largely benefited from previous waves, like Zoom Communications for meetings or Peloton for at-home exercise equipment. The digital currency dropped 8.4% to $54,179, according to CoinDesk. “At the least, (the virus) is likely to continue throwing sand in the gears of the global economy in 2022, restraining the recovery (and) keeping kinks in the supply chain.”Įven Bitcoin got caught up in the selling. “COVID had seemingly been put in the rear-view mirror by financial markets until recently," Douglas Porter, chief economist at BMO Capital Markets. also put travel restrictions on those coming from South Africa as well as seven other African nations.Īirline stocks quickly sold off, with United Airlines dropping 9.6% and American Airlines falling 8.8%.
both announced travel restrictions from southern Africa on Friday. The economic impacts of this variant were already being felt. It's been nearly two years since COVID-19 emerged, killing more than 5 million people around the globe so far.Ĭases of the new variant were found in Hong Kong, Belgium and Tel Aviv as well as major South African cities like Johannesburg. throughout the summer - and investors, public officials and the general public are jittery about any new variant that's spreading. There have been other variants of the coronavirus - the delta variant devastated much of the U.S. As a result, banks took some of the heaviest losses. That was evident from the action in the bond market, where the yield on the 10-year Treasury note fell to 1.48% from 1.64% on Wednesday.
“Investors are likely to shoot first and ask questions later until more is known,” Jeffrey Halley of Oanda said in a report. The blue chips closed down 905.04 points to end the day at 34,899.34. Exxon shares fell 3.5% while Chevron fell 2.3%.
The price of oil fell about 13%, the biggest decline since early in the pandemic, amid worries of another slowdown in the global economy. The World Health Organization called the variant “highly transmissible.” The index was dragged lower by everything from banks, travel companies and energy companies as investors tried to reposition to protect themselves financially from the new variant.
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