New COVID-19 Strain Reverses Stocks, Sterling Gains and Threatens More Volatility

New COVID-19 Strain Reverses Stocks, Sterling Gains and Threatens More Volatility

European stocks and the pound traded 2% lower on Monday amid growing market volatility over a new coronavirus strain in Britain, reports Reuters. The new strain, up to 70% more transmissible than the previous, has prompted European countries to close their borders to the U.K.

  • Prime Minister Boris Johnson will chair an emergency response meeting to discuss international travel and freight flow in and out of Britain.
  • The new strain has already put about 16 million Britons under tougher lockdowns and has overshadowed U.S. lawmakers’ agreement over a long-awaited stimulus bill.
  • Analysts see tougher restrictions as a setback to projected stronger economic recovery in 2021 that could necessitate more monetary stimulus.
  • The setback overturns bullish bets on commodities such as oil and copper, with investors’ expectations for 2021 falling.
  • Brent crude futures declined more than 3% while copper fell off the $8000-per-tonne mark it recently scaled for the first time since 2013.
  • S&P 500 futures fell 0.6% despite opening stronger after congressional leaders agreed to a $900 billion COVID-19 relief bill
  • Asian stocks dipped 0.2% after hitting record peaks last week, with Japan’s Nikkei shedding 0.4%.
  • The U.S. two-year/10-year Treasury yield curve flattened after rising to the highest levels in almost three years on Friday on stimulus bill optimism.
  • The risk-off judgment boosted safe-haven assets, with Gold jumping to a six-weeks high at $1,896 while the dollar index gained as high as 0.5%

Global stocks are declining as the dollar and Gold gain. SPY is down 2.06% on premarket, DAX is down 3.08%, Nikkei 225 is down 0.18%, GDPUSD is down 2.12%, EURUSD is down 0.71%, XAUUSD is up 0.40%

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