New COVID-19 variant drives markets sharply lower

Sharp losses across the board have been witnessed this morning, as a host of sectors drag the FTSE 100 down 200 points, with Ocado the only real winner.

• Stock markets plunge as new variant emerges.

• Nasdaq less affected as return of lockdowns contemplated.

• Airlines, travel, oil and miners drag the FTSE 100 to a six-week low.

European markets have seen most of the gains made in the course of October and November evaporate overnight as investors around the globe react to the new Covid variant that has appeared in South Africa. Early reports suggest it spreads quickly and could be much more resistance to existing vaccines. While the situation appears confined to the region for now, markets are scrambling to price in a return of restrictions across the globe, taking their cue from the UK’s travel restrictions and the tighter restrictions imposed in Portugal. This process is always a noisy and difficult one, and has been exacerbated by the lack of liquidity that is always a feature of markets around Thanksgiving. Already some pockets of strength (or less weakness perhaps) have emerged, with Nasdaq futures holding up better than the rest as investors there hold their nerve, but perhaps some of the early moves today will be reversed if a more optimistic tone prevails into this afternoon and next week. 

The list of ‘biggest losers’ on the FTSE 100 is not hard to guess this morning. IAG and Rolls-Royce are leading the way lower, thanks to sharply reduced expectations on global air travel, with InterContinental Hotels down a respectable 6% in sympathy. Falling oil and commodity prices have taken BP and Shell, along with most of the miners down sharply too. And just as the Nasdaq is doing better than most, the only real gainer of note is Ocado, up on expectations that its online shopping arm will get a boost. 

Ahead of the open, we expect the Dow to start at 35,010, down 794 points from Wednesday’s close.