[Good Morning Stock Market] Spread of UK-Origin COVID Variant... Market Shows 'Concerns'

Security personnel are controlling vehicles at the entrance of Dover Port in southern England on the 21st (local time). The French government prohibited the entry of vehicles and personnel through Dover Port for 48 hours starting from midnight on the 20th (local time). (Photo by Yonhap News)

[Asia Economy Reporter Kum Boryeong] As a mutated strain of the novel coronavirus disease (COVID-19) that originated in the UK spreads, the market showed a mood full of concern. The mutated COVID-19 is reported to be more than 70% more contagious than the original virus. Due to the mutated COVID-19 issue, the US stock market showed mixed trends, and the US dollar strengthened.

◆ Choi Jaewon, Kiwoom Securities Researcher = On the 21st (local time), the US stock market showed a weak trend of 1-2% decline in the morning due to the spotlight on the mutated COVID-19 issue, Tesla's inclusion in the S&P 500, and selling pressure from news of the US additional stimulus package agreement. However, it closed with a reduced loss as it showed a strong rebound centered on Nike (+4.91%), Microsoft (+1.83%), and financial stocks (+1.24%). By sector, all sectors except financials and IT (+0.07%) declined. On this day, international oil prices plunged 3% due to the mutated COVID-19 issue, leading the energy sector to weakness.

The main reason for the decline was concerns about the recently confirmed mutated COVID-19 strain in the UK. UK authorities announced that the transmissibility of this mutated strain is 70% higher than the originally discovered COVID-19, and countries in Europe, the Middle East, and North America announced countermeasures such as banning passenger flights from the UK. Concerns about stronger future economic lockdown measures and the prolonged COVID-19 pandemic expanded, leading to weakened investor sentiment.

◆ Kim Yumi, Kiwoom Securities Researcher = Despite the news of the US Congress agreeing on a stimulus package, the US dollar fell as concerns about the mutated COVID-19 in the UK reignited demand for safe-haven assets. The US Congress agreed on an additional $900 billion stimulus package including extra unemployment benefits and direct payments to individuals. However, as concerns about lockdowns due to the spread of mutated COVID-19 in the UK spread, anxiety in the global financial markets increased. Especially, the British pound weakened amid no-deal Brexit concerns, supporting the dollar's strength.

International oil prices fell despite the US stimulus package agreement due to news of the spread of a highly contagious mutated COVID-19 strain in the UK. European countries showed moves to strengthen economic lockdowns due to the mutated COVID-19 outbreak, raising concerns about demand slowdown. Since oil prices had risen on optimism about COVID-19 vaccines and expectations of demand recovery, the renewed demand concerns reversed the recent rise in oil prices. Meanwhile, gold fell due to the strong dollar but the decline was limited by the spread of mutated COVID-19 in the UK and the US stimulus package agreement.

This content was produced with the assistance of AI translation services.