- European indices finished deeply in red
- Wall Street plunged on new virus strain
- Oil plunges on renewed Covid travel fears
European indices finished today's session sharply lower, with DAX slid over 4.0%, CAC 40 lost 4.75% and FTSE 100 fell 3.64%, as a new Covid strain found in South Africa triggered a global shift away from risk assets. New variant has been already recorded in several countries, which raised concerns about the likely return of travel restrictions, already being implemented in the UK and other nations, and added downside risks to the outlook for the economic recovery. The World Health Organization decided to declare the new strain as a "variant of concern." However Novavax has already initiated development of a new recombinant spike protein based on the known genetic sequence of the new variant. Company believes that their vaccine is likely to provide protection against the new variant, therefore market reaction might be slightly exaggerated.
Similar moods prevail on Wall Street where Dow Jones dropped 2.5% to the lowest levels since mid-October, the S&P 500 lost 2.3% and the Nasdaq declined 2.2% to levels seen on October 29th. Cyclicals, travel and small-caps were among the worst performers today, while pharmaceuticals and stocks that previously benefited from Covid-19 lockdown like Zoom and Netflix rose sharply. On the week, all three main averages booked losses, Dow Jones closed 2.0% lower, the S&P dropped 2.2%, and the Nasdaq Composite plunged 3.5%.
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WTI crude plunged 13.0% while Brent crude futures fell over 11.0% as investors are concerned that new coronavirus strain will hurt demand. Also markets weigh the possibility that OPEC+ could retaliate on the USA and other countries for releasing their strategic reserves by holding back more oil than planned at a meeting on Thursday.
Meanwhile mixed moods prevail on the precious metals market. Gold price rose more than 1.50% above $1,815 an ounce earlier in the session, only to erase all of the gains in the evening. Meanwhile silver lost over 2.70% despite weaker dollar and lower treasury yields. The downward movement on the cryptocurrency market accelerated during today's session. Bitcoin price fell 8% and broke below major support at $55,000, while Ethereum at one point dropped more than 13%, however it managed to recover some of the losses and is currently trading above psychological $ 4,000 level.
GBPUSD pair fell during the Asian session, however sellers failed to break below lower limit of the wedge formation and price rebounded. Currently the pair is testing local resistance at 1.3350. Should a break higher occur, an upward impulse towards the next resistance at 1.3500 may be launched. However one needs to remember that the risk-off mood still prevails, therefore another downward move towards support at 1.3170 cannot be ruled out. This level is marked with 38.2% Fibonacci retracement of the upward wave launched back in March 2020. Source: xStation5