A shaky start to the year as coronavirus variant spreads and forces fresh lockdowns

• Fresh draconian lockdown measures sink the pound by over 1% on Monday and send markets risk-off.
• It was a shaking start to the year as traders get set for the US Senate run-off.

Traders took a cautious approach to the new variant of the coronavirus coupled with the timings of the holiday gatherings that could lead to a catastrophe in the spread of the virus. 

Ahead of the New year celebrations, cases of the more contagious variant of Covid-19 first identified in the UK had been confirmed in several European countries as well as Canada and Japan and now the US and South Africa. 

At the start of trade this week, there was widespread speculation that the UK would have no choice but to impose fresh draconian lockdown measures to curb the spread of the new variant and it was risk-off from the get-go, sinking the pound by over 1% on Monday.

It was finally announced in the UK evening by the UK's Prime Minister Boris Johnson that Everyone in England must stay at home except for permitted reasons during a new coronavirus lockdown expected to last until mid-February, the PM says.

Boris Johnson warned the coming weeks would be the "hardest yet" amid surging cases and patient numbers.

He also said that those in the top four priority groups would not be offered a first vaccine dose until the middle of February.

On Monday, the UK recorded more than 50,000 new confirmed Covid cases for the seventh day in a row.

A further 58,784 cases and an additional 407 deaths within 28 days of a positive test result were reported, though deaths in Scotland were not recorded.

Meanwhile, across the pond, New York has now reported its first confirmed case of the UK coronavirus variant.

A man who has no recent travel history has been infected locally according to the state as the man was symptomatic and had not travelled recently.

New York Gov. Andrew Cuomo said on Monday that the case of the B.1.1.7 variant was confirmed by the Wadsworth Lab, and involves a man in the Saratoga area who is in his 60s.

The US dollar found solace on the risk-off sentiment in the market and soared to fresh highs. Stocks plummeted with the benchmarks losing almost 1.5% on average. 

Concerning for US investors,  many states are once again imposing limits on businesses and everyday life and some governors are closing sectors they had reopened after spring lockdowns.

Meanwhile, in Japan, the Japanese government is planning to declare a state of emergency for Tokyo and three neighbouring prefectures as early as Thursday in a bid to curb the spread of the coronavirus.

Prime Minister Suga Yoshihide was reported to have said the government is considering declaring a state of emergency for the capital as well as Saitama, Chiba and Kanagawa prefectures.

Suga explained that new cases in those areas remained extremely high in the first three days of the new year so the declaration is likely to remain in effect for around a month.

Suga has also said, however, that the government will try not to hamper social and economic activities by implementing the measures in a limited and focused manner.

The Japanese government said it plans to ask restaurants and bars to reduce their hours and to expand financial support to those that comply with the request.

Meanwhile, the Asian shares edged lower on Tuesday on the risk-off feel and also amid uncertainty about Senate runoffs in Georgia.