LONDON, Nov. 26 (Reuters) – Wall Street stock indices fell to open after the Thanksgiving break in the United States, Treasury yields fell and oil hit its lowest level in two months as fears of a potentially vaccine-resistant variant of the coronavirus have prompted investors to rush to safe-haven assets.

Asian and European countries rushed to tighten restrictions on Friday after a new, potentially vaccine-resistant variant of the coronavirus was detected in South Africa, Singapore and India announcing tighter border controls and more rigorous testing . COMMENTS: GREG BASSUK, CEO, AXS INVESTMENTS PORT CHESTER, NEW YORK

“Ultimately it shows that Covid is still the investor narrative, a lot of the movement today is driven by the South African variant. We talked about four or five factors that drove the business. over the past two months – inflation fears, some economic data, Fed policy – but what we’ve seen over the past year is that the big developments around Covid have really ended up eclipsing some of the these other factors to a large extent and this is what drives market activity today. ”

“Longer term, we’re very constructive and bullish on stocks with much longer legs through 2022 as the economy reopens as supply chain issues become more muted. of these more disproportionate impacts or developments compared to Covid has really been the one thing that has shaken the markets the most. “

“We see the activity today and what will likely carry over to next week as a buying opportunity in the sense that this is another wrinkle here with the South African variant, but then that the immediate market declines could be significant and continue until early December, overall view this will be a buying opportunity to move into that trough there. “JACK ABLIN, HEAD OF INVESTMENT, CRESSET CAPITAL MANAGEMENT, CHICAGO

“It’s pretty amazing, we had such strong economic news on Wednesday. I think there is something in there, obviously worth investigating. I think the latest news we heard was that they had spotted this variant in Belgium, so it’s not only isolated in South Africa. I would say that initially the vaccination rate in South Africa is very low and is probably fertile ground for these variants . It certainly requires extra monitoring. Everything we are going to see today will be overkill. Just because of a lack of cash. “

“It certainly requires further study, but my first reaction is that everything we’re going to see today is overkill, so if we end up losing a lot, it will probably turn out to be a buying opportunity.” BIPAN RAI, HEAD OF FX STRATEGY FOR NORTH AMERICA, CIBC, TORONTO

“When you say risk, it basically means the markets are closing extended positioning and one of the most popular trades over the past few weeks has been to be long on the US dollar, and I think squaring that is really behind the dollar movement for today. I don’t think this indicates that the dollar has lost its safe-haven status. The short-term movement is mostly about the extended positioning and closing of these, once that it will become a little more balanced and if we are in a risk free scenario I would expect the dollar to continue to outperform. “

“Seems like this news on the scariant, let’s call it, because we don’t have a name for it, really sets off a lot of risky trends in the markets. Really, if we look at something like that where we have got to. new mutations on the mutations of a spike protein, it almost feels like the initial working hypothesis for most market players is that this is a new phase of the pandemic, new blockages and restrictions may be put in place, and it certainly looks like we “are going to need a new vaccine as well. If so, it introduces an additional degree of uncertainty that we had not previously taken into account. “BRIAN JACOBSEN, SENIOR INVESTMENT MANAGER, ALLSPRING GLOBAL INVESTMENTS, MENOMONEE FALLS, WISCONSIN

“Like the virus, it can be something that never really goes away completely. We just learn to live with and manage around it. It is not the virus itself that the market fears, but the political reactions to it. virus. If there are any new restrictions or increased restrictions on activity, then we could see fallout over the next week and month. Some countries, like the US and UK, might not be there. react as much as countries like China with their zero COVID strategy. Just as supply chains seemed as if they were healing, it could cause setbacks. ” PETER RUTTER, ACTIONS MANAGER AT ROYAL LONDON ASSET MANAGEMENT

“This news puts the handbrake on the markets. This could be the time people see as derailing the economic recovery and rate hikes. What we have is a big insert of uncertainty rather than something. material thing, but the markets don’t like it.

“The very fact that we don’t know is what concerns the market. There is a wide range of outcomes that can happen. We could have serious bottlenecks or we won’t have bottlenecks and an economy in full swing. boom. “


“A new wave of Covid is pushing investors to fly to safety, causing yields to drop by around 10 basis points across the US yield curve. However, we expect the bond rally to be short-lived for several reasons. First, the market has learned through new previous tensions that Covid is temporary. Second, a renewal of the foreclosure measures would worsen supply chain bottlenecks, introducing even more inflationary pressures on the economy. Therefore, central banks need to stop stimulating demand, keeping the recent hawkish trend of the Fed intact.


“Given that COVID has barely been contained around the world at this point and we don’t yet know if this new variant, with all of its mutations, is a greater threat, the market reaction seems a little over the top.

“But investors are inclined to shoot first and ask questions later and not get in the way of this type of position. The process may take a little longer. Remember that seasonal trends in the dollar US tend to turn more negative in December; market volatility may be the kind of hedge markets need to ease their positioning (rates and dollars) now and reassess the outlook in January. “


“Fear has gripped financial markets with the travel industry flying in another violent storm, after the discovery of a new strain of COVID that could be much more contagious and make vaccines less effective.”


European lockdowns alone would have meant weak GDP growth in the fourth quarter, but a rebound in the first quarter. The United States, the United Kingdom and Asia did not appear to be affected by the problem of Europe. If the new variant delivers its potential (usurping Delta and reducing vaccine efficacy), we have to think of overall low / flat GDP growth in Q4 and Q1. The effectiveness of the vaccine will determine the severity of the blockages and, therefore, whether it is a new recession.


It is the threat of vaccine breakout that is causing the market to react to both stocks (down) and bonds (up). As long as the markets are faced with a familiar viral situation that can be overcome with a sufficiently elaborate and executed vaccination strategy, the reactions will be muted, as we saw with the short-lived bond market rally last week when new lockdowns have been announced in Europe. This new variant, however, creates a potential threat to known responses and thus creates a more sustainable market response. HOLGER SCHMIEDING, CHIEF ECONOMIST OF BERENBERG:

At this point, it is too early to assess the potential economic consequences. Any new wave could cause serious economic damage. As a potentially mitigating factor, the world is now on high alert and has increased its capacity to develop, adjust and produce vaccines.


“This variant is a new risk for the markets. We cannot say how far it can escape vaccines.”


“People react with uncertainty as to what that means. You shoot first and ask questions later when this kind of news breaks out.”


“We still don’t know how infectious the virus is… it’s a general uncertainty. Markets here anticipate the risk of another global wave of infections if vaccines are ineffective.


“I don’t think it’s possible to go back to the pre-COVID world. We’re just going to mutate over time and it’s going to change the way people operate in the economy. It’s just the reality. “


“We see Germany considering a lockdown, so this new variant and this surge in the COVID situation poses some risk to market sentiment in general.

“If the COVID situation worsens, then the dollar-yen could fall further, but otherwise the divergence in monetary policy will certainly weigh on the yen in the medium term.” MARTIN WHETTON, FIXED INCOME MANAGER, CBA, SYDNEY

“Keep an eye out for the new variant of COVID-19. None of us are virologists, but we have all seen the impact this has had on the expected trajectory of central bank and market policy. “


“The UK has suspended flights from South Africa and five other neighboring countries, and we can expect more of that elsewhere. The complacency seen with the emergence of the delta variant in India is a lesson hard learned.

“The one bull in the Chinese store that could really derail the global recovery has always been a new strain of COVID-19 that has swept the world and caused the reimposition of mass social retractions. , it is B.1.1.529 is strongly changed, but the markets do not take any risk. ” (Reporting by Saikat Chatterjee and Sujata Rao in London, Tom Westbrook in Sydney and Kevin Buckland and Hideyuki Sano in Tokyo; Editing by Sherry Jacob-Phillips and Rachel Armstrong)

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