U.S. stock futures slumped Friday, with global markets rattled by a new coronavirus variant discovered in South Africa, which fanned concerns that new growth-crushing lockdowns could be imposed.
Trading volumes were low due to the Thanksgiving holiday in the U.S., which could be could contributing to the volatility. However, major benchmarks indicated a rough opening on Wall Street’s abbreviated post-Thanksgiving session. Dow futures contracts (YM=F) plunged 800 points, or 2.5%, while futures for the S&P 500 (ES=F) and Nasdaq (NQ=F) also fell sharply.
A new coronavirus variant has been discovered in South Africa, leading to an emergency session of the World Health Organization. Scientists say the new B.1.1.529 strain a concern, because it harbors a large number of mutations found in other variants — including the fast-spreading Delta variant that exploded over much of the summer — and it seems to be rapidly spreading.
While there’s no evidence yet, health officials are worried that the mutating variant could dilute or resist the efficacy of vaccines.
“It goes without saying that it’s still too early to say exactly how big a threat the new B.1.1.529 strain poses to the global economy,” Neil Shearing, Group Chief Economist at Capital Economics, said in a note.
Still, “the lesson from the past couple of years is that it’s the restrictions that are imposed in response to the virus – rather than the virus itself – that causes the bulk of the economic damage. So, the key question is how governments will respond in the event that the B.1.1.529 strain spreads,” Shearling wrote.
“That in turn will hinge on the extent to which it escapes the vaccines and, importantly, causes strains in national healthcare systems,” he added — underscoring that governments in the U.S. and U.K. had taken a “learn to live with the virus” approach, and thus are far less likely than other regions to impose new restrictions.
Oil prices also swooned, with U.S. crude futures down 6.2% to $73.57 per barrel on perceived fears of falling demand amid the new variant. Bond yields have also fallen as the market’s inflation fears temporarily gave way to the desire for safe-haven assets. The yield on the benchmark 10-year U.S. Treasury note was down to 1.53% after closing at 1.63% on Wednesday.
There is no major economic releases scheduled for Friday. The stock market will close at 1 p.m. ET on Friday due to the holiday weekend.
7:55 a.m. ET Friday: Stock futures tumble
Here’s where markets were trading Friday morning:
- S&P 500 futures (ES=F): 4,623.25, -75.75 (-1.61%)
- Dow futures (YM=F): 34,973.00, -776.00 (-2.17%)
- Nasdaq futures (NQ=F): 16,224.50, -141.50 (-0.86%)