SYDNEY: Stocks fell and headed for their biggest weekly decline in nearly two months on Friday, as safe-haven assets like bonds and the yen rallied, with a new variant of the virus adding to concerns about future growth and rising US interest rates.
The variant, detected by scientists in South Africa, may be able to evade immune responses and has prompted Britain to hastily introduce travel restrictions to South Africa.
The South African rand fell 1% at the start of trading, as did US crude futures. Futures on the S&P 500 fell 0.4%, while the risk-sensitive Australian and New Zealand dollars fell to their lowest level in three months.
“The trigger was the news of this variant of COVID… and the uncertainty as to what it means,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney. “You shoot first and ask questions later when this kind of news breaks out.”
Japan’s Nikkei fell 1.7% at the start of trading, and Australian stocks fell 0.6%. [.T][.AX]
MSCI’s largest Asia-Pacific stock index outside of Japan fell 0.2% for a weekly decline of 1% and global stocks, while remaining near record highs, were heading lower 0.7% weekly rate, the highest since early October.
Little is known about the new variant. However, scientists told reporters that there is a “very unusual constellation” of mutations, which are cause for concern because they could help it evade the body’s immune response and make it more transmissible.
British officials believe it to be the most important variant to date and fear it may be vaccine resistant.
Movements in Treasuries were significant as it opened in Tokyo – following the Thanksgiving holiday – as yields quickly reduced some of the week’s gains. Benchmark 10-year yields fell 5 basis points to 1.5927%.
The yen jumped about 0.4% to 114.91 per dollar and gold rose 0.2% to US $ 1,792 per ounce. [FRX/][GOL/]
The measures come amid concern over COVID-19 outbreaks resulting in movement and activity restrictions in Europe and as market price rates rise aggressively next year in the United States.
(Reporting by Tom Westbrook; Editing by Lincoln Feast.)