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Markets tumble as new covid variant Omicron brings travel restrictions, triggers global alarm

Worries have pummeled financial markets, especially stocks of airlines and others in the travel sector, and oil, which tumbled by about $10 a barrel.

By: New York Times | Washington |
Updated: November 27, 2021 1:49:33 pm
Slide in coronavirus sensitive stocks“The pandemic and COVID variants remain one of the biggest risks to markets, and are likely to continue to inject volatility,” Keith Lerner, a strategist at Truist, wrote in a note to clients.

Written by Eshe Nelson

Stocks around the world fell Friday and oil prices plunged, after evidence of a new coronavirus variant in South Africa prompted another round of travel restrictions and reignited concerns about the economic toll imposed by the pandemic.

The S&P 500 logged its worst day since February as a growing list of nations, including the United States, moved to prohibit travel from a half-dozen or so African countries. The uncertainty shook a stock market that had been performing robustly, and market watchers said the heightened volatility might continue as countries assessed the risks of the variant.

The number of mutations in this new variant has raised fears that it could be especially contagious and render current vaccines less effective. But scientists have not come to firm conclusions yet.

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“Where the market is selling off so dramatically is a product of, ‘yes, this is bad news,’ but also the fact that we have had a pretty strong run with relatively low volatility for a while,” said Kiran Ganesh, a strategist at UBS Global Wealth Management.

The S&P 500 closed 2.3% lower and the Nasdaq composite index dropped 2.2%. European stock markets fell 3% to 5%.

U.S. stock markets were closed Thursday for the Thanksgiving holiday and closed early Friday. Thin trading because of the holidays can exacerbate the swings.

Friday’s decline pulled the benchmark S&P 500 down further from a record high reached just last week. Amid supply chain disruptions and shortages of goods and workers in some sectors, investors have been preoccupied by rising prices and expectations about central banks withdrawing stimulus to combat inflation.

But the emergence of a new variant abruptly shifted their focus back to the core woes of the pandemic.

“The pandemic and COVID variants remain one of the biggest risks to markets, and are likely to continue to inject volatility,” Keith Lerner, a strategist at Truist, wrote in a note to clients.

In Asia, the Nikkei 225 in Japan closed 2.5% lower, and the Hang Seng Index in Hong Kong declined 2.7%.

In Europe, energy stocks led the markets lower. The Stoxx Europe 600 index closed down 3.7%. The FTSE 100 in Britain dropped 3.6%, while major stock indexes in France and Spain fell about 5%.

 

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