United States
The pandemic trade returned Friday as global markets saw a nasty flight from risk amid concerns over the Omicron coronavirus variant identified in South Africa. The Dow Jones industrial average fell 2.5 percent, the S&P 500 lost 2.3 percent, and NASDAQ slipped 2.2 percent.
Prices for oil and other commodities plunged, along with bond yields as markets priced in a much bleaker economic outlook. Among stock sectors, travel stocks, including airlines, were hit hard by expectations for renewed travel restrictions. Big losers included financials, industrials, energy, and consumer discretionary.
Pharmas held up best, including vaccine-makers Moderna, up 21 percent, and Pfizer, up 6.1 percent. Stay-at-home stocks advanced, including Peloton, the home exercise machine maker, up 5.7 percent, Zoom, up 5.7 percent, and Netflix, up 1.1 percent. Consumer staples, including grocery stores, and home and personal care stocks, outperformed too.
These price data reflect observations at 2:00 PM US ET: Dated Brent spot crude oil plunged US$9.41 to US$72.72 while spot gold fell 51 cents to US$1,788.10. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond fell 16 basis points to 1.82 percent, and the 10-year note declined 16 basis points to 1.48 percent.
Europe
Risk assets dropped Friday in response to concern over the coronavirus variant identified in South Africa. Stocks pegged to the recovery trade suffered the most, especially airlines, while health care and stay-at-home stocks fared better. The Europe-wide STOXX 600 fell 3.7 percent, the French CAC lost 4.8 percent, the German DAX lost 4.2 percent, and the UK FTSE 100 dropped 3.6 percent.
Among sectors, travel & leisure saw losses of roughly 5 percent, along with banks, as interest rates sank. Oil & gas stocks tracked oil prices much lower. Basic resources, autos & parts, and industrials saw big downside moves. Holding up better but still lower were defensive plays -- health care, utilities, technology, and real estate.
Among stocks in focus, IAG, owner of British Airways, dropped 14.6 percent, Scandic Hotels fell 9.4 percent, and Carnival, the cruise line, dropped 16 percent.
Asia Pacific
Asian equities saw a dramatic selloff in a risk-off move amid concerns about the new coronavirus variant that may be more contagious, with most markets ending near the day's lows. Reopening stocks and technology stocks suffered the most.
Japanese markets sank in a broad-based response to coronavirus fear with the Nikkei 225 off 2.5 percent and the Topix down 2.0 percent. Value/cyclical stocks were hit hardest. Among sectors, airlines, land transportation and real estate lagged while defensive utilities held up best. The yen rose in the flight from risk.
In mainland Chinese markets, equities were hurt by concern over the new coronavirus variant abroad and rising infections along China's eastern coast. China's CSI 300 index declined 0.7 percent and the Shanghai composite fell 0.6 percent. Energy and technology stocks lagged while materials managed modest gains. Hong Kong equities dropped across the board tech and internets off the most. Hong Kong's Hang Seng index fell 2.7 percent.
South Korea's KOSPI fell 1.5 percent and the Taiwan Taiex dropped 1.6 percent as part of the global flight from risk assets, with big tech companies leading the selloff.
Australia's All Ordinaries index declined 1.8 percent in the global risk off mood. Commodities prices led the declines. Energy stocks dropped with falling oil prices. Tech stocks suffered with buy-now-pay-later stocks off sharply, and software company Appen down 18 percent after an analyst downgrade.
