The week ends on a quiet note today, as US markets remain closed for the long Thanksgiving and Black Friday weekend.
The only somewhat interesting data today was a retail sales report from Australia for October - which was better than expected at 4.5%.
There was also a consumer confidence survey for November from France and business and consumer confidence reports from Italy, all three of which exceeded investors’ expectations.
Instead, today the markets are preoccupied with B.1.1.529 - the new coronavirus variant found in South Africa. It has a very high number of mutations, including in the key spike protein, which determines how the virus enters cells.
Due to its mutations, it is expected that this variant will be far more resistant to the Covid-19 vaccines. It is also more highly transmissible than previous variants.
Thus, the markets fear that a new massive wave of outbreaks will begin soon. More lockdowns and travel bans are likely in store, which will further harm the global economy. In fact, the United Kingdom already imposed a travel ban on several African countries, and the EU is about to do the same soon.
For the markets, today the news of the new variant has caused a massive decrease in risk appetite. Stock indices and risky assets are losing positions.
Furthermore, the share value of companies in the tourism and transportation sector are dropping, most notably airlines, while at the same time the value of pharmaceutical companies and digital businesses is rising.
