New Covid variant hits global markets as oil sinks 5%

Global markets went into a tailspin Friday following news of a heavily-mutated Covid-19 variant first detected in South Africa.

The World Health Organization will meet on Friday to address the emergence of the B.1.1.529 variant, which South African scientists have said contains more than 30 mutations to the spike protein, the component of the virus that binds to cells.

This is significantly more than the now-dominant Delta variant, itself highly contagious.

Many of these mutations are linked to increased antibody resistance and could affect the variant’s behavior with regard to vaccines, treatments and transmissibility, health officials have said, though the WHO has said further investigation is needed to better understand the implications.

The pan-European Stoxx 600 dropped 2.4% by mid-morning in Europe, with banks and travel stocks taking heavy losses, along with the oil and gas sector as oil prices tanked.

International benchmark Brent crude was down 5.3% at $77.89 per barrel during morning trade in Europe, while U.S. crude fell more than 6.2% to $73.58.

U.S. stock futures pointed to an opening loss of more than 800 points on the Dow Jones Industrial Average, while markets in Asia-Pacific fell sharply overnight, with Hong Kong’s Hang Seng index and Japan’s Nikkei 225 each shedding more than 2.5%.

The yield on the benchmark 10-year Treasury note dropped by more than 11 basis points to 1.5277% at 4 a.m. ET. The yield on the 30-year Treasury bond fell to 1.8798%. Yields move inversely to prices and 1 basis point is equal to 0.01%. Spot gold was up by around $19 to $1,808 per troy ounce.

The variant has been detected in a Hong Kong quarantine hotel in a traveler from South Africa, with one individual across the hall also reportedly affected and remaining travelers quarantined separately.

The U.K. government imposed a ban on flights from South Africa and Botswana, where cases of the new variant have also been reported, along with Eswatini, Lesotho, Namibia and Zimbabwe, from noon on Friday until 4 a.m. on Sunday. From then, a mandatory 10-day quarantine period will be enforced on travelers from those countries.

Cryptocurrencies did not avoid the hit either. Bitcoin sank 7% in the last 24 hours to $54,561, according to Coin Metrics data, its lowest level since Oct. 8. The cryptocurrency is down 20% from an all-time high of nearly $69,000 which it hit earlier this month.

Ether, the second-biggest crypto, plunged more than 10% to $4,007, while XRP slumped 10% to around 95 cents.