Dow industrial futures extend losses to 683 points on new COVID variant in South Africa

Dow industrial futures extend losses to 683 points on new COVID variant in South Africa.

Scientists detected a new COVID variant in South Africa that could be the blame for a recent dramatic spike in cases.

What’s driving the market?

The discovery of the new COVID variant was announced on Friday by South Africa’s health minister Joe Phaahla. He said scientists were concerned because of its high number of mutations and the dramatic spike in infections the country had seen over the past four or five days.

After new cases appeared to stabilize at 200 a day, South Africa reported more than 1,200 on Wednesday and 2,465 on Thursday. Scientists and health officials are concerned that such a highly mutating variant could escape vaccines. The U.K. government is banning flights from the country along with five other African nations, effective Friday.

U.S. crude prices slumped 3% to $75.90 a barrel on perceived fears of falling demand amid the new variant.

“For the moment it is understood that the number of cases is small, but due to the thin liquidity levels in Asia trading as a consequence of the US holiday the reaction does appear to be outsize, with a surge into bonds, sending yields plunging, and gold higher,” said Michael Hewson, chief market analyst at CMC Markets.

Investors are returning from the Thanksgiving Day break to a shortened session for U.S. markets, which is often accompanied by thinner volumes as traders often wait until Monday to return. There is no economic data on the calendar for Friday. But the week had been simmering with concerns about rising COVID cases in Europe and new restrictions.

Fear of a new variant was overshadowing the Black Friday shopping day, which puts the focus on retailers as consumers shop for bargains.