Stocks plunge amid fears of COVID-19 variant emerging; Dow futures discount 2%

Stocks plunge amid fears of COVID-19 variant emerging;  Dow futures discount 2%

Beijing Global stocks and oil prices fell on Friday after South Africa found a fast-spreading variant of the coronavirus and the European Union proposed suspending air travel from South Africa.

The London benchmark fell 3% and Tokyo lost 2.5%. Shanghai, Frankfurt and Hong Kong also fell sharply. Dow Jones Industrial Average futures are down more than 2%.

Some European countries have already tightened anti-virus controls this week after their case numbers soared. Austria imposed a 10-day lockdown, while Italy restricted the activity of unvaccinated people. Their government advised Americans to avoid Germany and Denmark.

The 27-nation European Union proposed a travel suspension to member governments after South Africa said the alternative was spreading in its most populous province. Britain banned flights from South Africa and five neighboring countries.

“Investors are likely to shoot first and ask questions later until more is known,” Oanda’s Jeffrey Haley said in a report. That was evident from the movement in the bond market, where the yield on US 10-year Treasury notes fell to 1.54% from 1.64% on Wednesday. The bond market was closed Thursday in the US for Thanksgiving.

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At midday, the FTSE in London fell to 7099.69 and the DAX in Frankfurt lost 3.1% to 15,429.26. The CAC index in Paris fell 3.8 percent to 6,805.72 points.

On Wall Street, S&P 500 futures lost 1.7% and Nasdaq futures fell 1%. US markets were closed on Thursday and scheduled to reopen on Friday for a shortened trading session.

In Asia, the Shanghai Composite lost 0.6% to 3564.09 and the Nikkei 225 in Tokyo fell to 28,751.62. Hong Kong’s Hang Seng fell 2.7% to 24,080.52.

Investors were already more cautious after Federal Reserve officials said in notes from their October meeting issued this week that they expected to respond to rising inflation by raising interest rates sooner than previously planned.

Investors are concerned that central banks may feel pressure to withdraw stimulus earlier than planned due to stronger-than-expected inflation. The Fed previously said it expected to keep interest rates low until late next year.

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Financial markets have been encouraged by strong US corporate earnings and signs that the global economy is recovering from the historic downturn in activity last year due to the pandemic. Stock prices were boosted by credit easing and other actions taken by the Federal Reserve and other central banks.

In energy markets, benchmark US crude fell $4.22, or 5.4%, to $74.17 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the global oil price base, slipped $4, or 4.9%, to $76.92 a barrel in London.

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