Yesterday, the US stock market was closed due to the Thanksgiving holiday. The US stock markets have a shortened day today.
On Friday, investors dropped risky assets and switched into safe-haven assets because of a new strain of the coronavirus. Investors are worried that the strain of the virus (B.1.1.529) found in South Africa could spread internationally, preventing the global economic recovery. Many countries have already closed flights to South Africa. Investors’ fears have already pushed treasuries and the Japanese yen higher, while oil decreased by 3% and the South African rand has fallen to its lowest level in a year. The World Health Organization and scientists in South Africa are studying a recently identified variant that has been described as very different from previous versions and of great concern. This variant has a cluster of mutations that could help it bypass the body’s immune response and make it more transmitted.
European stock indexes ended Thursday’s trading higher despite a rise in the disease in the region. France’s CAC 40 increased by 0.48%, Britain’s FTSE 100 added 0.33%, Germany’s DAX added 0.25%, Spain’s IBEX jumped by 0.56%, while Italy’s FTSE MIB decreased by 0.04%. Belgium is planning to take stricter measures to limit the spread of the virus tomorrow. The Czech government declared a state of emergency due to a surge in cases of coronavirus. The United Kingdom hurried to introduce restrictions on trips to South Africa and neighboring Botswana, Namibia, Zimbabwe, Lesotho, and Eswatini. The UK Health Protection Agency reported that the B.1.1.529 strain has twice as many delta strain mutations.
The European Central Bank’s October meeting minutes showed that the PEPP (stimulus program) purchase could end by March 2022. At the moment, most policymakers are inclined to continue stimulus and take a cautious approach to any policy changes, despite the pressure from high inflation.
According to analysts at Goldman Sachs, the US Federal Reserve will begin a more rapid asset reduction plan from January next year, and interest rate hikes should be expected earlier than previously expected.
Oil prices fell sharply as a rise in coronavirus cases in Europe and a new Covid-19 strain raised concerns about the outlook for energy demand ahead of next week’s OPEC+ meeting on production policy.
The Nikkei 225 stock index decreased by more than 3%, the highest of any major index in the region. On Friday, Japanese stocks showed a sell-off in Asia since worries about a new variant of the coronavirus and a stronger yen frightened traders. Japanese Prime Minister Fumio Kishida on Friday urged companies whose revenues have restored to pre-pandemic levels to raise wages by 3% or more in labor talks next spring, seeking a virtuous cycle of growth and wealth distribution. Last week, Bank of Japan Governor Haruhiko Kuroda confirmed his commitment to extensive monetary stimulus, adding that the central bank is ready to increase it if necessary.
China demanded that cab aggregator Didi develop a plan to leave the US exchange. In the case of privatization, the company will have to buy back its shares from investors at least at the IPO price, which is 70% higher than the current market value.
The risk-sensitive Australian dollar fell on Friday as investors began shifting funds into safe-haven currencies following the discovery of a new variant of the coronavirus. Australia’s ASX 200 index also decreased by 1.73% after the opening trading, despite a surge in the retail sales index, one of the indicators of economic recovery.
Main market quotes:
- S&P 500 (F) 4,701.46 0.0 (0.0)
- Dow Jones 35,804.38 0.0 (0.0)
- DAX 15,917.98 +39.59 (+0.25%)
- FTSE 100 7,310.37 +24.05 (+0.33%)
- USD Index 96,77 -0.05 (-0.05%)
Important events for today:
- Australia Retail Sales (m/m) at 02:30 (GMT+2);
- Eurozone ECB President Lagarde’s Speech at 10:00 (GMT+2).