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The new COVID-19 strain causes market distress and causes Reuters volatility

© Reuters. File Photo: Investors place their hands behind their heads in front of an electronic board displaying stock information for Hefei brokerage firms.

Sujata Lao

London (Reuters)-Global stocks fall, dollars rise, volatility assets as new coronavirus strains expanding rapidly in the UK threaten torpedo market optimism over the recovery of economic growth with vaccines Soared throughout the class.

Wall Street was suddenly tilted to open low.

The strain, which is said to be up to 70% more contagious than it was originally, puts about 16 million British people under tighter blockades and urges some countries to close their borders with the UK. Virtually obscured the positive US news about the stimulus bill.

Suspension of overseas travel and the flow of cargo both inside and outside the UK can be confusing for UK homes and businesses.

Consistent with the lack of a post-Brexit trade deal before the December 31 deadline, the currency regained some of its losses to trade around $ 1.3285 by 1250 GMT, but at one point it was $ 1.32. It was below 2.5%.

The market was well below previous lows, although most remained firmly in the red.UK stocks fell just over 2%, but with British bank Lloyds (LON :) Barclays (LON :) I lost more than 6% at some stage before recovering slightly.

European stocks fell about 2.5%. Travel and leisure stocks fell 3.5%.

Emiel van den Heiligenberg, Head of Asset Allocation for Legal & General Investment Management, said:

He said the strain is likely to have already invaded Europe. “Unblocked countries have no choice but to do it quickly. That’s the reaction of the market,” he said.

The sale caused a full increase in volatility, a measure of asset class price volatility, raising Wall Street’s “fear gauge” to its highest level since early November.

Currency volatility has also skyrocketed, with overnight sterling volatility approaching a nine-month high.

Nasdaq futures fell 1.2%, while futures fell 1.8%, regaining their previous decline ().

While safe assets such as German and US government bonds have recovered, gold, which normally rises during times of turmoil, has fallen 1.3% before regaining some of its losses.

The weakness of the day of the big stock sale will rekindle the memory of the March market downturn when investors rushed the dollar to sell large amounts of assets.

On the positive side, US Congressional leaders have finally agreed to a $ 900 billion COVID-19 bailout bill.

LGIM’s Van den Heiligenberg also predicted that vaccine deployment would limit market declines.

“The fix is ​​justified, but a very strong sellout will surprise us … for the vaccine, by March-April next year, we can think about normalization again. It should be, “he added.

Dollar dash?

With the sale of shares, investors rushed up the US dollar, and the dollar rose to 90.8, well below last week’s two-and-a-half-year lows.

The euro temporarily fell 1% to $ 1.216.

Bond yields in the US and Germany fell, and US yields fell 6 basis points over a 10-year period.UK’s two-year borrowing costs hit record lows

The US 2-year / 10-year government bond yield curve is another indicator of growth expectations and has flattened the touch. In optimism about the stimulus bill, it rose to the steepest level in almost three years on Friday.

The turmoil could overturn a bullish bet on oil and was expected to benefit from rising growth next year.

Futures fell 3%, but copper fell below $ 8,000 per ton, which scaled for the first time since 2013.

“The message is clear. Oil prices are still very high and will continue to be at the mercy of the pandemic,” said Stephen Brenock, oil broker PVM.

The new COVID-19 strain causes market distress and causes Reuters volatility The new COVID-19 strain causes market distress and causes Reuters volatility

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