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News Article

New Virus Strain Wobbles Global Stock Markets

By Peter Appleby | Mon, 12/21/2020 - 13:00

Worries over the new COVID-19 strain found in the UK are shacking global stock markets, with oil prices plummeting and Mexico’s BMV reporting losses.

The stock index, S&P/BMV IPC, fell 1.09 percent or 479.11 points by 11.04 CST, having opened with a 1.51 percent drop at 8.45 CST.

The index’s performance has been echoed across the globe as markets react to country’s closing their doors on flights from the UK following the announcement of a new COVID-19 strain in the country’s south-east region.

UK Health Secretary Matt Hancock said that there was nothing to suggest that it is more harmful than the main strain, though the European Centre for Disease Control Prevention stressed that the new variant was “significantly more transmissible than previously circulating variants.”

As of Monday, 40 countries have banned flights arriving from the UK, but many others, including Mexico and the US, have not. Markets fear that the more contagious variant could spread rapidly and set off a chain of lockdowns that would bring the global economy grinding to a halt again.

Aside from the BMV, the FTSE 100 dropped by 1.73 percent, while the S&P 500 fell 0.69 percent. Virtually all global markets fell at the beginning of the days trading, though most had recovered in part by lunchtime CST.

Stocks of oil are taking a particularly harsh beating with the memory of April’s historic plunge into negative pricing still fresh in the mind of traders. Europe’s Brent crude fell by 4.13 percent to US$50.10 per barrel while the US’s WTI crude dropped by 4.01 percent to US$47.13 per barrel. If widespread lockdowns were put in place over the Christmas period in the US and Europe, global storage levels could once again approach maximum.

Outside of energy, aviation has been hit once again as a bitter year continues for the industry. Mexico’s flag carrier airline Aeromexico, which was forced to take Chapter 11 protection in June, has seen its stock price fall 7.74 percent to 33 cents per share as of 11.33 CST on Monday.

Mexico City re-entered complete lockdown on Saturday as maximum capacity of the region’s hospitals was approached. Medica Sur’s stock, traded as MedicaB on the BMV, jumped 12.94 percent on Monday, as health services were once again in high demand.

Peter Appleby Peter Appleby Journalist and Industry Analyst