Shares fall, bonds jump on fears of virus strain: markets break down

Shares, government interest rates and oil fell on Friday as the yen jumped as a new Covid-19 tribe discovered in southern Africa sent a wave of caution across global markets.

MSCI Inc.’s Asia-Pacific stockbroker fell to its lowest level since early October, with Japan and Hong Kong outperforming and travel stocks among the biggest declines. Futures in the US and Europe fell and the 10-year government bond yield fell to 1.55%.

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The World Health Organization and scientists in South Africa are studying the newly identified variant, which has been described as very different from previous versions and is of serious concern. Britain, Singapore and Israel restricted travel from South Africa and some neighboring countries. Hong Kong confirmed two cases of the strain.

The dollar was close to its highest level in 16 months, while South Africa’s rand weakened and commodity currencies retreated. Crude oil fell more than 3% and gold rose. U.S. markets closed Thursday for Thanksgiving will have an abbreviated Black Friday session.

The discovery of the strain comes on top of concerns in the markets about high inflation and the prospect of a faster exit from ultra-loose monetary policy conditions. Global equities have risen about 16% this year, clearing a host of risks after investors poured nearly $ 900 billion into stock exchange-traded and long-only funds in 2021 – topping the total from the past 19 years.

“It’s a scary headline” about the virus variant, so it may have caused a knee-jerk reaction, said Kyle Rodda, an analyst at IG Markets Ltd. He added that “North America outside the desks means there is a lack of a wall of buyers” and that thinner markets provide more marked movements.

Variant ‘playbook’

December futures on the Cboe Volatility Index, a measure of implied stock fluctuations for the S&P 500, rose as traders prepared for turbulence as US markets reopened.

Justin Tang, head of Asian research at United First Partners, pointed out that “the world has been through this before with Delta,” adding “there is already a playbook for such situations”, and that “mutations are expected and nothing unknown.”

Meanwhile, Goldman Sachs Group Inc. economists said they expect the Fed to tighten policy faster than previously expected, including doubling the pace at which it slows down bond purchases to $ 30 billion a month from January. They see an interest rate hike from almost zero in June.

In China, regulators have asked Didi Global Inc.’s top executives to devise a plan to delist from US stock exchanges, said people familiar with the matter. It can revive fears of Beijing’s intentions with its gigantic technology industry. A measurement of Chinese technology stocks fell.

The Chinese economy continued to decline in November, when sales of cars and homes fell again as a crisis in the housing market dragged on, according to Bloomberg’s overall index of eight early indicators.

Here are some important events this week:

  • Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event.

Some of the key movements in markets:

Equities

  • S&P 500 futures fell 1.2% at 06.55 in London. The S&P 500 rose 0.2 per cent on Wednesday
  • Nasdaq 100 futures fell 0.6 percent. The Nasdaq 100 rose 0.4 percent on Wednesday
  • Japan’s Topix index fell 2 percent.
  • Australia’s S & P / ASX 200 index fell 1.7 per cent.
  • South Korea’s Kospi index fell 1.5 per cent.
  • Hong Kong’s Hang Seng Index fell 2.3 per cent.
  • China’s Shanghai Composite Index lost 0.6 percent.
  • Euro Stoxx 50 futures fell 2.3%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1 percent.
  • The euro was at $ 1.1230, up 0.2%
  • The Japanese yen was at 114.60 per dollar, up 0.7%
  • The offshore yuan was $ 6.3925 per dollar, down 0.1%

Bonds

  • The US 10-year government interest rate fell eight basis points to 1.55 per cent.
  • Australia’s 10-year bond yield fell 13 basis points to 1.74%

Raw materials

  • West Texas Intermediate crude fell 3.3% to $ 75.78 per barrel. barrel
  • Gold was at $ 1,801.41 an ounce, up 0.7%

© 2021 Bloomberg

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