Global markets fall sharply on new virus variant fears
More than £65bn was wiped off the UK’s leading share index on Friday,
reflecting fears that a new coronavirus variant could wreak further
havoc on international business and travel.
The FTSE 100 fell more
than 3%, or 240 points, as the market opened on Friday morning, putting
it on course for its steepest one-day drop in a year.
Shares in major airlines plummeted with IAG, the owner of British
Airways, falling more than 21% in early trading, while EasyJet plunged
16%. The UK government said it would add six countries, including South Africa, to the red list, with flights being temporarily banned.
A
number of other European countries, including Italy and Germany, were
also preparing to ban travellers from the southern African countries.
Engine maker Rolls-Royce and oil giants BP and Shell were also among big fallers.
Overnight, Asian markets suffered their sharpest drop in two months
after the detection of the possibly vaccine-resistant coronavirus
variant
The variant, designated as B.1.1.529 and first identified in Botswana, has a "very unusual constellation"
of mutations that could help it dodge vaccine immunity and natural
antibodies, scientists have said. On Friday morning, Israeli health
authorities said they had detected their first case of the new variant.
Amid the hit to stocks, the pound also took a hammering, with
sterling dropping below $1.33 for the first time this year as investors
lose their appetite for risk.
The new variant has also prompted
investors to scale back their expectations for a Bank of England (BoE)
interest rate rise in December, adding to downward pressure on the
pound.
European markets were all hit hard in early trading, with Germany's DAX down 3.1%, and France's CAC 40 down 3.6%.
Increasingly
treated as a safehaven for investors during turbulent times, digital
currencies such as bitcoin and ethereum also fell more than 5% and 3.7%
respectively.
Gold, a traditional investment for nervous traders, is currently in
demand, as is the Swiss franc and US Treasuries, according to analysts
at BayernLB.
Elsewhere, oil prices recorded their sharpest daily
drop since July on news of the variant, which UK health officials said
was the most significant found to date, according to scientists. There
are worries that the variant could lead to a new wave of infections and
travel restrictions, stifling economic growth.
European benchmark
Brent crude fell nearly 5% to $78.15 a barrel. while US benchmark West
Texas Intermediate (WTI) crude dropped 6.1%, to $73.56 a barrel, after
hitting a two-month low during the session.
