Get Our FREE Newsletter

Sign Up

European Stock Futures Sharply Lower; New Virus Strain Raises Lockdown Fears

Spread the love

Investing.com – European stock markets are expected to open sharply lower Friday on concerns a new Covid variant will prompt fresh mobility restrictions, hindering the region’s economic recovery.  

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 2.3% lower, CAC 40 futures in France dropped 2.6% and the FTSE 100 futures contract in the U.K. fell 2.3%.

Virus cases have soared in Europe in the last month, with a number of countries introducing stricter Covid measures. But a degree of urgency was added to the situation by the announcement late Thursday by the World Health Organization that it’s monitoring a new Covid-19 variant with “a large number of mutations”, detected mainly in southern Africa. 

The United Nations agency is set to hold a special meeting later Friday to discuss the implications for vaccines and treatments given the degree of mutation from the original strain. Ahead of that, the U.K. has already announced a temporary flight ban from a number of southern African countries and put travelers from the region into quarantine.

The European markets received a negative handover from Asia on the news, with Japan’s Nikkei dropping 2.5%, Hong Kong’s Hang Seng down 2.2% and South Korea’s Kospi falling 1.4%. The region’s airline stocks were particularly hard hit, and this sentiment is likely to translate into hefty losses in the travel sector when Europe opens.

Wall Street was closed Thursday for Thanksgiving, and will close early on Friday in a shortened session. Ahead of that U.S. stock futures point to a sharply lower open, with the Dow Jones Industrial Average contract over 600 points lower. 

“We still don’t know how infectious the virus is … it’s a general uncertainty. Markets are anticipating the risk here of another global wave of infections if vaccines are ineffective,” said Moh Siong Sim, an analyst with the Bank of Singapore, Reuters reported. 

“Reopening hopes could be dashed.”

Crude prices slumped Friday as the announcement of a new Covid-19 strain raised concerns about demand just as a U.S.-led coalition of major consumers is adding output to the global supply.

Worries are growing that this will result in a global supply surplus in the first quarter, and brings next week’s meeting of the Organization of the Petroleum Exporting Countries, Russia and allies, a group known as OPEC+, firmly into focus

The group is to decide whether it will continue raising output by 400,000 barrels per day in January, or to hold back supply.

By 2:05 AM ET, U.S. crude futures traded 3.4% lower at $75.78 a barrel, while the Brent contract fell 2.7% to $80.03.

Additionally, gold futures rose 1% to $1,801.80/oz, while EUR/USD traded 0.2% higher at 1.1229.

This post was originally published on this site