Global stocks sink after South Africa finds new Covid variant

Global stocks and oil prices tumbled Friday after South Africa found a fast-spreading coronavirus variant and the European Union proposed suspending air travel from southern Africa.

London's benchmark fell by an unusually wide margin of 3.3 per cent at the opening and Tokyo lost 2.5 per cent. Shanghai, Frankfurt and Hong Kong also declined. Wall Street futures fell.

Some European countries already tightened anti-virus controls this week after their own case numbers spiked. Austria imposed a 10-day lockdown, while Italy restricted activity by unvaccinated people. Americans were advised by their government to avoid Germany and Denmark.

The 27-nation EU proposed the travel suspension to member governments after South Africa said the variant was spreading in its most populous province.

Britain banned flights from South Africa and five nearby countries.

Investors are likely to shoot first and ask questions later until more is known, Jeffrey Halley of Oanda said in a report.

In early trading, the FTSE in London fell to 7,067.17 and the DAX in Frankfurt lost 3.3 per cent to 15,391.00. The CAC in Paris plunged 4 per cent to 6,789.13.

On Wall Street, the future for the benchmark S&P 500 future lost 1.6 per cent. That for the Dow Jones Industrial Average was off 2 per cent.

In Asia, the Shanghai Composite Index lost 0.6 per cent to 3,564.09 and the Nikkei 225 in Tokyo declined to 28,751.62. The Hang Seng in Hong Kong tumbled 2.7 per cent to 24,080.52.

The Kospi in Seoul lost 1.5 per cent to 2,936.44 and Sydney's S&P-ASX 200 fell 1.7 per cent to 7,279.30.

India's Sensex retreated 2.2 per cent to 57,499.50. New Zealand and Southeast Asian markets also declined.

Wall Street's benchmark S&P 500 closed up 0.2 per cent on Wednesday. US markets were closed Thursday for a holiday and were due to reopen Friday for a shortened trading session.

Investors already were more cautious after Federal Reserve officials said in notes from their October meeting released this week they foresaw the possibility of responding to higher inflation by raising rates sooner than previously planned.

Investors worry central bankers might feel pressure to withdraw stimulus earlier than planned due to stronger-than-expected inflation. The Fed said earlier it foresaw keeping rates low until late next year.

Financial markets had been encouraged by strong US corporate earnings and signs the global economy was rebounding from last year's history-making decline in activity due to the pandemic.

Stock prices have been boosted by easy credit and other measures rolled out by the Fed and other central banks.

In energy markets, benchmark US crude fell USD 4.52 to USD 73.87 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oils, shed USD 3.65 to USD 77.27 per barrel in London.

The dollar fell to 114.39 yen from Thursday's 115.36 yen. The euro gained to USD 1.1243 from USD 1.1221.