Global markets tumbled today driven by investors being spooked by a fresh Covid-19 strain emerging in Southern Africa that has been described by scientist as the worst yet.
In London, the FTSE 100 registered one of its day’s in months, shedding 3.31 per cent to plunge to 7,068.68 points heading into the final hour of trading.
The mid-cap FTSE 250 was whacked 2.53 per cent, dropping to 22,690.25 points.
In overnight trading in Asia, Japan’s Nikkei closed 2.53 per cent lower, its steepest fall in five months, while Hong Kong’s Hang Seng index plummeted 2.67 per cent.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Fear has gripped the financial markets with the travel industry flying into another violent storm, after the discovery of a new Covid-19 strain which could be far more contagious and may render vaccines less effective.”
News emerged yesterday of a new variant of Covid-19 letting rip across countries in Southern Africa, sound alarm that it could derail the global fight against the virus.
Scientists have warned the strain has mutated to such an extent that it is radically different from the one that emerged in Wuhan, China.
The heavily mutated strain triggered concerns that it may be able to evade vaccines, or significantly reduce the efficacy of jabs, which, if borne out, would knock the global effort to quash Covid-19.
Some of its mutation are known to increase the virus’s ability to spread.
The UK government ordered last night travellers from South Africa, Namibia, Zimbabwe, Botswana, Lesotho and Eswatini, countries where the new variant has taken off, to self-isolate for 10 days on arrival to the country, with those arriving after 4am on Sunday required to quarantine in a hotel.
Analysts warned the UK could be hit hard by the new variant.
“London is naturally highly exposed to new strains given its high volume of travellers, and markets will be on the lookout in the coming days for any evidence the new variant has already reached UK, with obvious downside risks for the pound,” warned experts at bank ING.
Travel stocks were the big losers in the City today due to investors pouring out of the sector on fears blanket travel bans could be reimposed to curb the spread of the new strain.
British Airways parent company IAG plunged nearly over 13 per cent, while easyJet had over 11 per cent shaved off its share price. Tui also fell 9.47 per cent, and Wizz Air dropped 12.66 per cent.
Ryanair and Rolls Royce at one point today both fell more than 10.5 per cent.
Oil prices plummeted due to concerns airlines, who represent a large source of demand for the commodity, will be forced to shutter services.
International benchmarks WTI and Brent Crude dropped 9.1 per cent and 8.09 per cent respectively. Bitcoin retreated 20 per cent at one point today.
US markets opened sharply lower.
The Dow Jones fell 2.32 per cent, while the S&P 500 and tech-heavy Nasdaq dipped 1.75 per cent and 1.57 per cent respectively.