The week started off on a sour note in the east as more details started pouring in regarding the new strain of coronavirus found in the UK, which is claimed to be 70% more transmissible than the earlier one. FTSE 100 Index tumbled 2.6% during mid-day trade, extending the losses that started on Wednesday last week. Germany’s DAX witnessed a 3.6% fall.
In Asia, Hong Kong’s Hang Seng Index closed down 0.7%, while Japan’s Nikkei 225 slipped a modest 0.18%. Indian markets were more spooked with Sensex plunging 3%, representing the largest fall in almost 7 months. Markets in Singapore and Australia also closed in losses, even as Shanghai and South Korea remained mostly unaffected.
The market reaction came on the heels of many countries including Canada, Russia, France, India, Italy, Hong Kong, Norway and a few others announcing travel restrictions to UK, in view of the worsening pandemic situation in Britain.
On Monday, British Prime Minister Boris Johnson placed some regions in southern England under Tier 4 restriction days ahead of Christmas. Johnson has also requested the public to avoid public gatherings and Christmas shopping to avoid another massive wave of the pandemic.
The new virus strain has already spread to other countries including Australia, Denmark, and the Netherlands, according to the World Health Organization.
There’s still much that we don’t know. While we are fairly certain that the variant is transmitted more quickly, there is no evidence to suggest it is more lethal or causes more severe illness. Equally, there is no evidence to suggest that the vaccine will be any less effective against the new variant.
– Boris Johnson
The British Pound slipped 0.7%, while oil prices also declined from last week. Both Brent Crude and U.S. West Texas Intermediate (WTI) crude fell over 4% on expectations of slower demand recovery.
The markets, in fact, entirely ignored the long-pending stimulus package valued at $900 billion, which was inked during the weekend by US lawmakers. Futures of Nasdaq 100, S&P 500, and DJIA were down on Monday, mimicking the rest of the world.
Labor market conditions improved once again and jobless claims dropped to about 400,000 after rising last week, as economic activity picked up. Stocks rallied in the action-packed week and benchmark
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