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Stock markets rattled by fears about emerging coronavirus variant | CBC News

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Global stock markets and oil prices tumbled Friday after South Africa identified a new, fast-spreading coronavirus variant and the European Union proposed suspending air travel from the region.

The 27-member EU proposed a mass travel suspension to member governments after South Africa said the variant was spreading in its most populous province.

Britain banned flights from South Africa and five nearby countries. Austria imposed a 10-day lockdown while Italy restricted activity by unvaccinated people. Americans were advised by their government to avoid Germany and Denmark. Belgium has already reported two cases of the emerging variant, and the slew of data points has added up to a flurry of uncertainty.

The Dow Jones Industrial Average, the S&P 500 and the TSX Composite Index were all down by about two per cent within minutes of markets opening.

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“This news has completely overshadowed early anecdotal reports of strong in-person and online traffic for Black Friday sales,” said Colin Cieszynski with SIA Wealth Management in Toronto.

Friday would normally be a quiet day on U.S. stock markets because of the Thanksgiving holiday on Thursday, as stock markets in New York are scheduled to close at 1 p.m.

Oil and travel companies hit hardest

That thin trading could potentially make market anxieties worse as there is a smaller pool of buyers and sellers available to offset outliers.

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The VIX — which is known as Wall Street’s “fear index” because it measures volatility — spiked by more than 40 per cent to above 26 points. That’s its highest level since January 2021, before vaccination campaigns started to ramp up.

Anything related to energy or travel and tourism is being hit especially hard as investors digest the prospect of another round of limitations on international travel.

The North American benchmark oil price known as West Texas Intermediate lost more than $9 US, or more than 12 per cent, to trade just below $70 US a barrel.

Air Canada shares lost more than eight per cent while those of cruise line Carnival lost 11. Hotel chains Hilton and Marriott were both down by more than eight per cent.

“These announcements have sparked a sell-off in travel-related stocks (airlines, cruise lines, hotels etc.) and has sparked a rally in stay-at-home and vaccine stocks,” Cieszynski said.

Pfizer shares rose nearly seven per cent while Moderna shares jumped more than 22 per cent.

“Today’s price action and abrupt moves were a good reminder of a need to avoid virus complacency into 2022,” currency analyst Audrey Childe-Freeman with Bloomberg Intelligence said in a note to clients.

Cryptocurrencies sold off heavily as investors ran toward things like gold, bonds and the U.S. dollar that are perceived to be safer stores of value.

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“In times like this, we get a true sense of what investors consider to be real, reliable safe havens and bitcoin is off eight per cent today, which has delivered a fatal blow to its safe-haven credentials, putting an end to another crypto myth that has surfaced over the years despite there being zero evidence to back it up,” analyst Craig Erlam with foreign exchange firm Oanda said.

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