Financial Market Turmoil Due to UK COVID Variant... Global Stock Markets and International Oil Prices Plunge

European Stocks Fall Over 2% on 21st... US Markets Also Shake
International Oil Prices Drop 2.6% Amid Demand Concerns

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin, New York = Correspondent Baek Jongmin] The global financial markets have begun to show signs of anxiety amid fears of a new variant of the coronavirus disease (COVID-19) that originated in the UK. As more than 40 countries worldwide have restricted flights arriving from the UK, concerns over the economic recession that persisted throughout this year have resurfaced, causing international oil prices to plunge sharply.

On the 21st (local time), according to Bloomberg News and others, the pan-European EuroStoxx50 index closed down 2.74% at 3448.68. The UK FTSE100 index and Germany’s DAX index fell by 1.73% and 2.82%, respectively, while France’s CAC40 index also dropped 2.43% to close at 5393.34.

The US New York stock market also plunged nearly 2% in early trading but trimmed losses due to expectations of a congressional stimulus deal and vaccine distribution. On the New York Stock Exchange, the Dow Jones Industrial Average rose 0.12% (37.40 points) to 30,216.45, the S&P 500 index fell 0.39% (14.49 points) to 3694.92, and the Nasdaq index declined 0.1% (13.12 points) to 12,742.52 by the close.

The main factor shaking global markets that day was fear of the UK-originated COVID-19 variant. As a more contagious variant spread in the UK, countries worldwide swiftly imposed bans on flights from the UK. Neighboring European countries such as France, Germany, Belgium, Italy, and Spain, as well as Canada, Russia, India, and Hong Kong, implemented entry bans on travelers from the UK. New York State in the US also decided to restrict entry for passengers arriving from the UK.

Emiel van den Heiligenberg, head of asset management at Legal & General, a major UK insurer, said, "Investors are fearful that the new variant is already present on the European continent, and it is only a matter of time before European countries implement new quarantine measures to contain it." He added, "We must assume that this variant will also spread to the US."

Indeed, the Chicago Board Options Exchange Volatility Index (VIX), known as Wall Street’s fear gauge, rose 16.64% in one day to 25.16, marking its highest level in over a month. The British pound also depreciated due to concerns over the new COVID-19 variant and the failure of Brexit negotiations (the UK’s withdrawal from the European Union).

International oil prices also declined. The repeated restrictions on UK-origin flights amid recession fears are expected to reduce demand for transportation such as air travel. On the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) crude oil for January delivery fell 2.6% to close at $47.97 per barrel. Brent crude prices also dropped more than 2%. Norbert Ruecker, head of commodity research at Swiss bank Julius Baer, explained, "The virus variant and new travel restrictions are fueling renewed anxiety," adding, "The path back to normalcy has encountered obstacles."

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