Weekly round up
After a relatively calm week, UK markets tumbled on Friday with the FTSE falling 1.93% since Monday to trade at 7,116 points at the time of writing.
Investors dumped risky assets amid growing concerns over a new and possibly vaccine-resistant coronavirus variant identified in South Africa, Botswana and Hong Kong. Travel-related stocks led the losses as Britain announced a temporary ban on flights from South Africa and several neighbouring countries, a move that was followed by Israel and Singapore, with the EU set to follow suit.
The B.1.1529 strain has been reported to contain up to 30 identified mutations, prompting officials from the World Health Organisation to call an emergency meeting to discuss what it means for vaccine efficacy as well as other treatments.
In the commodity markets, Brent crude futures slumped almost 5% to $78.5 per barrel on Friday, the lowest in nearly four weeks pressured by surplus concerns following the announcement of a coordinated release of oil reserves by major consuming nations and a weakening demand outlook due to Covid-19. The OPEC’s advisory board expects 400,000 barrels per day excess in the oil markets in December and predicted that the surplus would expand to 2.3 million bpd (barrels per day) in January and 3.7 million bpd in February if consumer nations proceed with the release.
Steel futures traded around (Chinese Yuan) CNY 4,300 a tonne, the lowest since February 2020 as production in China is set to resume after restrictions imposed much of the year, while domestic demand for the metal remains week.
Gold prices rose on Friday as safe haven assets gained, however, the metal is still set to end the week down more than 2% after a hawkish pivot among Federal Reserve officials, robust economic recovery and heated inflation bolstered bets of higher US interest rates.
US stock futures slumped on Friday due to renewed concerns over the more potent virus variant. Contracts on the Dow Jones futures dropped 2%, while S&P 500 and Nasdaq 100 futures declined 1.6% and 1.2% respectively. The US dollar rallied against commodities and risk-sensitive currencies including the New Zealand and Australian dollars, while it declined against the Japanese Yen.
Meanwhile, the dollar index remained close to a 16-month high on Wednesday as outlook for US rates grew increasingly hawkish. The yield on the benchmark 10-year Treasury note was down by almost 10 basis points to 1.52% on Friday, the lowest in two weeks, amid a flight to safety due to the new coronavirus variant. Investors return from the Thanksgiving holiday to a trading session likely to be volatile amid worries over further lockdowns and travel restrictions.
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