Five Things You Need to Know to Start Your Day


New Covid strain, rush to safety, and commodities plunge. 

How bad?

There are fears this morning about a new strain of Covid-19 that’s rapidly spreading in southern Africa. The European Union and the U.K. are already moving to halt air travel from the region. Singapore announced a similar move as governments act quickly to protect progress made in controlling the virus. Two people in Hong Kong quarantine were found to be infected with the strain. Scientists have yet to determine how quickly the new variant can spread and whether it is resistant to vaccines

Acting fast 

While governments are acting quickly to try to control risks from the new variant, investors are taking no chances. Stocks in Asia were on track for their worst session since March while Europe’s Stoxx 600 Index was 2.5% lower by 5:50 a.m. Eastern Time. S&P 500 futures pointed to a lot of selling pressure at the start of what would traditionally be a quiet day on Wall Street. Bonds are the big winners with sovereign yields plunging and the yield on the 10-year Treasury dropping 11 basis points to 1.528%. Gold jumped $20 to trade over $1,800 an ounce. 

Commodity plunge

News of the new Covid variant did what the coordinated release of oil from global reserves could not, by causing a crash in the price of crude. A barrel of West Texas Intermediate was trading close to $73 as investors tried to price in another slowdown in international travel. Base metals are also being caught in the rush from growth-reliant assets with copper, nickel and aluminum all declining in London trading. 

Reverse 

The other thing that is suffering a rapid reversal this morning is bets on central-bank rate rises. Traders have pushed the timing of a 25-basis-point rate increase by the Federal Reserve to September from June. Bets on Bank of England policy now see a rate hike in February rather than next month, while there is now little chance of a move from the ECB next year.

Bear market 





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