The new Covid-19 strain bedevils the markets Oil falls

2021-11-28T17:48:28
European stocks Oil Oil companies
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The new Covid-19 strain bedevils the markets Oil falls 10% in a week 10%  and European stocks are at their lowest level in 6 weeks

The new Covid-19 strain bedevils the markets Oil falls 10% in a week 10%  and European stocks are at their lowest level in 6 weeks: The world’s financial markets have been confused by the revelations of the new Covid- 19 strain, the fastest spreading, setting the stage for further down waves of many financial instruments, primarily oil.

Evest follows market developments in the following report.

Topics:

A new Covid-19 strain fluctuates upside down

Oil is at its highest level in the last 9 weeks because of the new strain

European stocks fall to the lowest level in a month and a half

The decline in the value of oil companies

 

 

A new Covid-19 strain fluctuates upside down

On Friday, the Minister of Health of the Republic of South Africa, Joe Phaahla,
told reporters about the rapid spread of a new variant of coronavirus infection in some areas of the country,
named B.1.1.529. It was also found in neighboring Botswana, Phaahla added.

Later, new strain infections were detected in tourists returning from African countries to Hong Kong and Israel.

WHO will convene an emergency meeting to discuss the impact of the specific strain on current treatments and vaccines.

“We don’t know much about it (the new breed – IF). But we do know it’s got a lot of mutations.

The concern, therefore, is that mutations of the many viruses may affect its behavior,”
said Maria Van Kerkhove, WHO technical lead on COVID-19. 

According to scientists, the strain that has been identified, which is currently mutated,
maybe more likely to spread than others, and thus reduce the effectiveness of current vaccines, according to MarketWatch.

The several States have already begun introducing restrictive measures in response to reports of the spread of the “South African” strain.

The United Kingdom has suspended flights from South Africa and five other African countries.

Meanwhile, the new strain was identified at a time when European countries are struggling with a new wave of Covid-19 infections.

Earlier, Austria announced the start of the lockdown,
and Germany and the Netherlands introduced restrictions on people who had not been vaccinated against Covid- 19.

Oil is at its highest level in the last 9 weeks because of the new strain

The decline in oil stocks price accelerated during Friday’s trading and recorded its lowest levels in the past nine weeks, a
mid concerns of weak demand due to the discovery of a new strain of the Coronavirus in South Africa.

The cost of Brent crude futures for January on the London Stock Exchange Futures on Friday is $74.6 per barrel,
$7.62 (9.27%) lower than the closing price of the previous session.

The price of West Texas Intermediate crude futures for January on the New York Mercantile Exchange (NYMEX) is $70.48 per barrel,
$7.91 (10.09%) lower than the final value of the previous session.

“Depending on how the situation in the oil market develops due to the emergence of a new strain and WHO estimates,
the outlook for OPEC + meeting may change next week,” wrote Jeffrey Haley, an analyst at OANDA.

He added: “OPEC + has repeatedly stated that a new increase in COFID- 19 is among the potential risks,
which could undermine oil demand at a time when the Alliance is increasing production.” 

According to the analyst, OPEC + is unlikely to increase production more than planned at 400 thousand barrels per blow,
unless “the situation does not worsen next week, and oil prices do not decline further.”

In the meantime, the market is wondering whether OPEC + will decide to abandon the pre-approved plan
to increase production because of the coordinated decision of the United States and some other countries to sell oil from strategic reserves.

OPEC expects excess oil market supply in December to reach 400 thousand barrels per day
and expects it to increase to 2.3 million barrels per day in January,
and 3.7 million barrels per day in February if consuming countries continue to sell oil from reserves. 

 

European stocks fall to the lowest level in a month and a half

Western European stock markets closed their last trading session this week, falling to their lowest levels over the past six weeks.

The composite index of the largest companies in the Stoxx Europe 600 region fell by 3.7% to 464.05 points.

According to Trading Economics, Friday’s session was the worst for the index since June 2020.

The French CAC 40 index fell by 4.8%, the British FTSE 100-3.6%, and the German DAX 4.1%.

The Spanish IBEX and the Italian FTSE MIB indices declined by 5.1% and 4.5% respectively.

Investors are watching closely the spread of Covid-19 in the region and are watching news of the emergence of a new strain of coronavirus in South Africa.

On Friday, the Minister of Health of the Republic of South Africa, Joe Phaahla,
told reporters about the rapid spread of a new variant of infection in some areas of the country,

as well as its emergence in neighboring Botswana.

Later, new strain infections were detected in tourists returning from African countries to Hong Kong and Israel.

After that news, Great Britain stopped the travel of its citizens to six African States and also prohibited the entry of their citizens into their territories.

WHO was supposed to hold an emergency meeting at which it planned to discuss the impact of the specific strain on current treatments and vaccines used.

 

The decline in the value of oil companies

Among the leading companies in decline are the Stoxx 600 with declining stocks of companies in the tourism and entertainment sector, as well as air carriers. 

Stocks of the British Carnival cruise ship fell by 16%, Wizz Air Holdings- 15.1%, Consolidated International Airlines Group- 14.6%,
Deutsche
Lufthansa– 12.3%, Ryan Air Stocks Holdings- 12.1%, Izzy Jet- 12%, and German cruise company Dufry- 11.2 ٪.

The value of major European oil and gas companies has also declined against the backdrop of the biggest decline in oil prices in the past nine weeks. 

British BP shares lost 7.5 percent, British-Dutch Royal Dache Shell – 5.7 percent, Italian-Eni – 6.5 percent, and French Total Energy- 6.2 percent.

Diageo stock, the world’s largest alcohol producer, fell by 3.9%.

The company announced the start of the next phase of a £4.5 billion (approximately $6 billion) share buyback program until June 30, 2024.

 

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