Stocks slip, havens rally as new COVID-19 variant spooks investors
Passersby wearing protective masks are reflected on an electronic board displaying stock prices outside a brokerage amid the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan, September 29, 2021. REUTERS/Issei Kato
SYDNEY, Nov 26 (Reuters) - Asian stocks suffered their sharpest drop in two months on Friday after the detection of a new and possibly vaccine-resistant coronavirus variant sent investors scurrying toward the safety of bonds, the yen and the dollar.
MSCIs broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.3%, its sharpest drop since September. Casino and beverage shares sold off in Hong Kong, and travel stocks dropped in Sydney.
Scientists said the variant, detected in South Africa, may be able to evade immune responses. British authorities think it is the most significant variant to date, worry it could resist vaccines and have hurried to impose travel restrictions on South Africa. read more
South Africas rand dropped 1% to a one-year low in early trade. The risk-sensitive Australian and New Zealand dollars fell to three-month lows and S&P 500 futures fell 0.9%.
The selling in Asia has global shares (.MIWD00000PUS), on course for their worst week since early October. Dow Jones futures fell 1% , while FTSE futures and Euro STOXX 50 futures each dropped about 1.4%.
Little is known about the new variant. However scientists told reporters it has "very unusual constellation" of mutations, concerning because they could help it dodge the bodys immune response and make it more transmissible. read more
"Markets are anticipating the risk here of another global wave of infections if vaccines are ineffective," said Moh Siong Sim, a currency analyst at the Bank of Singapore.
Moves in Treasuries were also sharp following the Thanksgiving holiday and yields quickly pulled back some of the weeks gains. Benchmark 10-year yields fell nearly 6 basis points to 1.5841%.
The moves come against a backdrop of concern about COVID-19 outbreaks driving restrictions on movement and activity in and as markets aggressively price U.S. rate rises next year.
European countries expanded COVID-19 booster vaccinations and tightened curbs overnight. Slovakia announced a two-week lockdown, the Czech government will shut bars early and Germany crossed the threshold of 100,000 COVID-19-related deaths. read more