UK stocks fall as new COVID strain prompts economic paralysis concerns

UK stocks fell again on Tuesday as fears of a highly infectious new strain of COVID-19 — that has a 70% greater transmission rate than the original one — has caused a wave of travel bans and prompted fears of a delay to global economic recovery

The FTSE 100 (^FTSE) was lower 0.3% at market open. Its European peers had a stronger open, with Germay’s DAX (^GDAXI) having gained 0.6% in Frankfurt and the CAC 40 (^FCHI) was also higher 0.6% in Paris. The Europe-wide Stoxx 600 index (^STOXX) was up 0.6%

US futures were in the red, with the S&P futures (ES=F) lower 0.4% and Dow Jones (YM=F) also down 0.4%. The Nasdaq (NQ=F) was 0.1%

“Investors’ chief dilemma is if the new strain of coronavirus is more perilous than the current one,” said Naeem Aslam, chief market analysts at AvaTrade

“Of course, the WHO doesn’t think that the new variant is more dangerous. But from a consumer and investor sentiment perspective, the new variant of coronavirus Is likely to cause more damage to the global economy

“This also means that the government officials and monetary policy members need to reload their guns as we could be in for a rough year. After all, it was the fiscal and monetary policies that saved the global economy from crippling.”

The news of a new COVID-19 strain originating from the UK has prompted countries across the world to shut their borders to Britain on Monday, leading to travel chaos and raising the prospect of food shortages days as the nation prepares to leave the European Union

Even news that the US House and Senate have passed a last-minute $900bn (£669bn) coronavirus stimulus package on Monday night after weeks of negotiations between the Democrats and Republicans wasn’t enough to overcome market fears

While this is a much-welcomed market update regarding offering relief to Americans, the new strain confirms the winter will bring a long road to recovery, which has already led to 1.7 million deaths worldwide. The news of the new strain led to European markets having their worst session in almost two months on Monday

Asian markets also slumped amid the new virus fears. Japan’s Nikkei (^N225) fell 1%, the Hong Kong Hang Seng (^HSI) was down 0.7%, and the Shanghai Composite (000001.SS) fell 1.9%. South Korea’s KOSPI (^KS11) was lower 1.6%

Source(s): YAHOO FINANCE