New COVID-19 Strain Inflicts Pain on Equities and Oil

SEATTLE (Oil Monster): A gauge of equities around the world fell on Monday and oil prices plunged as concerns about a new coronavirus strain in Britain overshadowed optimism over a vaccine-fueled rebound in economic growth.

U.S. stocks, however, trimmed their losses as investors also weighed the benefits of a $900 billion fiscal stimulus deal reached by Congress over the weekend. The benchmark S&P 500 was down only slightly after having fallen as much 2% earlier.

Financial stocks also helped cap broader losses, rallying more than 1% after the Federal Reserve said the largest U.S. banks could resume stock buybacks.

The dollar index, which had risen earlier in the session as investors sought refuge in the greenback, gave up its gains and was last 0.28% lower.

“The initial sell-off was a knee-jerk reaction to the news we saw in the UK,” said Keith Lerner, chief market strategist at Truist Advisory Services in Atlanta. “As the day goes on, people are starting to sift through what’s in the fiscal package. In our view, it’s underappreciated.”

Still, MSCI’s gauge of stocks across the globe declined 0.63%.

The new coronavirus strain, said to be up to 70% more transmissible than the original, has put some 16 million Britons under tougher lockdowns and prompted several countries to shut their borders to the UK.

Worries over the new strain sent European stocks plunging. The pan-European STOXX index ended 2.3% lower.

In both Europe and the United States, travel and leisure stocks, which had been expected to be among the biggest beneficiaries of an economic reopening, fell.

The British pound also tumbled on virus concerns, as well as the lack of a post-Brexit trade deal ahead of a Dec. 31 deadline. It was last down 0.27% at $1.3482.

The euro traded slightly lower, too, down 0.07% to $1.2246.

Meanwhile, commodities that had been expected to benefit from a growth upswing next year plunged.

Both Brent and U.S. crude dropped nearly 3% while copper fell off the $8,000-per-tonne mark it recently scaled for the first time since 2013.

Courtesy: www.reuters.com