Global stocks dwindle, oil collapses on fresh Covid-19 travel bans

Abroad, European action collapsed after mainland countries banned travel from the UK in an effort to keep a highly infectious variant of the rapidly spreading coronavirus in England. The Stoxx Europe 600 fell 2.4%, down from bank, energy and travel and leisure stocks.

“Obviously, there is a fear on the part of policy makers,” said Paul Donovan, chief economist at UBS Global Wealth Management. “The fact that it spreads faster probably extends more restrictions for a longer period. In turn, this has economic consequences. “

Oil prices also fell amid expectations that new restrictions on European travel and transport will boost fuel demand in 2021. Brent crude futures, a benchmark in international energy markets, lost 5.1% to at $ 49.49 a barrel.

In the UK, where officials over the weekend tightened lock-in measures for London and surrounding areas in an effort to contain the variant, the FTSE 100 stock benchmark fell by 1.9%.

Adding to investors’ concerns about British markets, negotiators missed a deadline on Sunday to reach a Brexit deal, raising the prospect of a disruptive UK exit from the European Union at the end of the year. The pound fell 2.2 percent against the dollar, its biggest drop since the worst market crash in March, trading at $ 1.32.

Closing the borders threatens to add more tension to European economies already struggling under restrictions aimed at calming Covid-19 winter outbreaks, investors said. The British government said the new strain appears to be spreading 70% faster than previous versions.

“It will make the short term much worse than it already was,” said Nicholas Brooks, head of economic and investment research at Intermediate Capital Group.

US futures have been successful, despite an agreement by lawmakers on a tax-exempt package that will ease pressure on the US economy over the winter. The aid package of about $ 900 billion would support consumption in the coming months, investors said.

“It’s more of an antidepressant than a stimulant,” said Donovan. “Uncertainty here is the extent to which $ 600 checks are spent and the extent to which an additional $ 300 a week unemployment benefit alleviates the fear of unemployment for those who have jobs.”

For now, investors and economists have said the impact of the mutant virus and new travel restrictions could also be limited for US companies and markets. US officials are probably less willing than European authorities to restrict movement and trade, they said. The variant was not identified in the USA either, and the American officials demanded calm and continuous precaution on Sunday.

“As long as the vaccines are launched on time, by the second quarter of next year, we should see activity return to normal,” Mr Brooks added. The new coronavirus strain and border closure will not change the medium-term outlook, he said.

In the bond markets, 10-year Treasury yields fell to 0.910% from 0.947% on Friday. The dollar rose against the euro and the Japanese yen, as well as the pound sterling, pushing the WSJ Dollar up 1%.

European airlines’ stocks fell on Monday, with British Airways International Consolidated Airlines Group down 8.9% and Deutsche Lufthansa down 6%.

The slim holiday transaction could have added to the volatility in European markets. “I think pretty much everyone is closed for business for the rest of the year,” said Gregory Perdon, co-chief investment officer at the UK-based Arbuthnot Latham..

Asian markets were mixed until the end of transactions. China’s Shanghai Composite Index ended the day 0.8% higher, while Hong Kong’s Hang Seng fell 0.7% and Japan’s Nikkei 225 fell 0.2%.

Write to Joe Wallace at [email protected]