Stocks and Oil Drop Amid New Coronavirus Variant

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ImageIn the town of Parys, South Africa, on Friday. South Africans faced travel restrictions in several countries over growing fears about the new variant.
Credit…Kim Ludbrook/EPA, via Shutterstock

European countries on Friday joined Singapore, Israel and others in restricting travel from southern Africa in a frantic effort to keep a newly identified, and apparently significantly evolved, variant of the coronavirus from crossing into their borders.

In the past, governments have taken days, weeks or months to issue travel restrictions in response to new variants. This time, restrictions came within hours of South Africa’s announcement — at least 10 countries around the world had announced measures before South African scientists had finished a meeting with World Health Organization experts about the variant on Friday.

There is no proof yet that the variant could diminish the protective power of the vaccines, but uncertainty on that question was one factor in the speed of countries’ move toward restrictions.

The new variant, initially called B.1.1.529, has a “very unusual constellation of mutations,” according to Tulio de Oliveira, director of the KwaZulu-Natal Research and Innovation Sequencing Platform. On the protein that helps to create an entry point for the coronavirus to infect human cells, the new variant has 10 mutations, many more than the dangerous Delta variant, Professor de Oliveira said.

Still, even epidemiologists who have been the most outspoken in urging protection from the virus urged calm on Friday, noting that little is known about the variant and that several seemingly threatening variants have come and gone in recent months.

“Substantively NOTHING is known about the new variant,” Roberto Burioni, a leading Italian virologist, wrote on Twitter, adding that people should not panic.

Stocks tumbled around the world on Friday as the news of the variant spooked markets, prompted Britain, France, Italy and others to bar flights and impose restrictions, and terrified many Europeans already exhausted by news of breakthrough infections, surging cases ahead of another imperiled holiday season and rallies by vaccine skeptics.

So far only a few dozen cases of the new variant have been identified in South Africa, Botswana, Belgium, Hong Kong and Israel.

But the case in Israel was a person who had recently arrived from Malawi, according to the state broadcaster, Kan. And Belgium’s case was detected in a young, unvaccinated woman who had recently returned from travel abroad, but not to South Africa or neighboring countries, Belgian researchers said.

Countries in Europe, once again the epicenter of the pandemic, wasted no time and were among the first to announce travel bans. Britain announced its restriction on Thursday, and put it into force on Friday.

“More data is needed but we’re taking precautions now,” Sajid Javid, the British health secretary, said on Twitter.

The discovery of the variant by South African authorities this week comes as the virus was already galloping across the continent in a deadly fourth wave, especially in Eastern Europe where vaccination levels are low and restrictions have been loose.

Italy’s decision on Friday to block travel from South Africa and the region showed that even a country that has generally been ahead of the wave, vaccinating much of its population and introducing early, and then progressively stricter, health passes to keep infections low, is not taking any chances.

The history of the pandemic has shown that blocking flights has not been a panacea in stopping the virus, and especially variants that spread with increasing ease. But this time, countries acted much earlier and more restrictions seemed likely.

Ursula von der Leyen, the president of the European Union’s executive arm, said in a Twitter post on Friday morning that it would also propose restricting air travel to European countries from southern Africa.

In a statement posted on Friday on a government website, South Africa said it would urge Britain to reconsider its travel restrictions, saying “even the World Health Organization is yet to advise on the next steps.” But that complaint came before a flurry of other bans from other countries.

In the past two days, scientists in South Africa — which has a sophisticated detection system — discovered the variant after observing an increase in infections in South Africa’s economic hub surrounding Johannesburg.

“This variant did surprise us — it has a big jump in evolution, many more mutations than we expected, especially after a very severe third wave of Delta,” Professor de Oliveira said.

Credit…Themba Hadebe/Associated Press

Scientists are still unclear on how effective vaccines will be against the new variant flagged by a team in South Africa, which displays mutations that might resist neutralization. Only several dozen cases have been fully identified so far in South Africa, Botswana, Hong Kong and Israel.

The new variant, B.1.1.529, has a “very unusual constellation of mutations,” with more than 30 in the spike protein alone, according to Tulio de Oliveira, director of the KwaZulu-Natal Research and Innovation Sequencing Platform.

On the ACE2 receptor — the protein that helps to create an entry point for the coronavirus to infect human cells — the new variant has 10 mutations. In comparison, the Beta variant has three and the Delta variant two, Mr. de Oliveira said.

The variant shares similarities with the Lambda and Beta variants, which are associated with an innate evasion of immunity, said Richard Lessells, an infectious diseases specialist at the KwaZulu-Natal Research and Innovation Sequencing Platform.

“All these things are what give us some concern that this variant might have not just enhanced transmissibility, so spread more efficiently, but might also be able to get around parts of the immune system and the protection we have in our immune system,” Dr. Lessells said.

The new variant has largely been detected among young people, the cohort that also has the lowest vaccination rate in South Africa. Just over a quarter of those ages between 18 and 34 in South Africa are vaccinated, said Dr. Joe Phaahla, the country’s minister of health.

While cases of the variant are mainly concentrated in the country’s economic hub, particularly in the country’s administrative capital, Pretoria, it is “only a matter of time” before the virus spreads across the country as schools close and families prepare to travel for the holiday season, Dr. Phaahla said.

Credit…Altea Tejido/EPA, via Shutterstock

Stocks around the world tumbled on Friday, along with oil prices, after evidence of a new coronavirus variant detected in South Africa prompted some countries to reinstate travel restrictions, reigniting concerns about the economic toll the pandemic could impose after months of recovery.

S&P 500 futures dropped 1.7 percent on Friday morning, and Nasdaq futures fell 0.9 percent. European markets fell 2 to 3 percent, or more.

Futures of West Texas Intermediate oil, the U.S. crude benchmark, fell nearly 7 percent to $73.16 a barrel.

Demand for the relative safety of government bonds jumped, pushing their prices up and their yields down. The yield on 10-year U.S. Treasury plunged 12 basis points, or 0.12 percentage point, to 1.51 percent. The yield fell by the most since Nov. 4, 2020, the day after the U.S. presidential election. The yield on Germany’s bund, Europe’s benchmark bond, fell 7 basis points to minus 0.32 percent.

The number of mutations in this new variant has raised fears that it could be especially contagious, and caused concern about the effectiveness of current vaccines. But scientists haven’t come to any conclusions yet.

“As long as markets are faced with a familiar virus situation that can be overcome with a sufficiently crafted and executed vaccination strategy, the reactions will be muted,” analysts at Royal Bank of Canada wrote in a note to clients. “This new variant, however, creates a potential threat to the known responses and thus creates a more lasting market response.”

U.S. stock markets were closed on Thursday for the Thanksgiving holiday and will close early on Friday afternoon.

In a hark back to the fluctuations in markets last year, stocks that flourished under lockdowns and staying at home rose in premarket trading, including Zoom, Netflix and Peloton. Meanwhile companies vulnerable to travel restrictions, like Carnival, the cruise company, and Boeing, the plane maker, fell.

In Europe, energy stocks led the markets lower. The Stoxx Europe 600 index fell 2.5 percent. The FTSE 100 in Britain dropped 2.7 percent, while major stock indexes in France, Spain and Italy also fell more than 3 percent. In Asia, the Nikkei 2225 in Japan closed 2.5 percent lower and the Hang Seng index in Hong Kong closed down 2.7 percent.

As several countries including Britain and France rushed to restrict flights from South Africa and other countries in the region, airline stocks dropped. IAG, the parent company of British Airways, fell nearly 12 percent, the biggest fall in the FTSE 100.

Credit…Jerome Favre/EPA, via Shutterstock

The Hong Kong government said on Thursday that it had detected two cases of a new variant identified in South Africa, which scientists have warned shows a “big jump in evolution” and could limit the effectiveness of vaccines.

The infections were detected in a man who had returned to Hong Kong from South Africa this month, and later in another man staying across the hall in the same quarantine hotel. (Hong Kong requires almost all overseas arrivals to quarantine in hotels for two to three weeks.) The virus’s genetic sequence was identical in both men, suggesting airborne transmission, according to the city’s Center for Health Protection. Both men were vaccinated.

Further sequencing by the University of Hong Kong confirmed that the viruses belonged to the new variant from South Africa, officials said, though they acknowledged that information about the variant’s public health impact was “lacking at the moment.”

Some Hong Kong experts have questioned the length and efficacy of Hong Kong’s quarantines, noting that officials have recorded several cases of residents in quarantine hotels apparently infecting people who were staying in other rooms.

In the case of the latest variant infections, the government has blamed the first man for not wearing a surgical mask when opening his hotel room door, as well as “unsatisfactory air flow” in the hotel. As of Friday afternoon there had been no reports of infections in nearby rooms.

The presence of the new variant may complicate efforts to reopen the border between Hong Kong and mainland China. For months, Hong Kong officials have said that resuming quarantine-free travel between the Chinese territory and the mainland — virtually the only places in the world still pursuing a containment strategy that seeks full eradication of the virus — is their top priority, even though the strategy has damaged the city’s reputation as a global finance hub.

Mainland officials have said that Hong Kong is not doing enough to control the virus, even though the city has recorded just two locally transmitted cases in the last six months. The mainland has recently faced new domestic outbreaks; on Thursday, the National Health Commission there reported four new local cases.

On Thursday evening, Hong Kong’s No. 2 official, John Lee, said mainland officials had told him earlier in the day that Hong Kong had “basically fulfilled” the conditions to reopen the border. He said details would still need to be worked out, including the introduction of a mainland-style “health code” app that has raised privacy concerns.

Asked by a reporter whether the new variant would delay reopening with the mainland, Mr. Lee said only that the Hong Kong authorities would “ensure that adequate research and tracking are done in this regard.”

“Of course, we must manage and control any new risks,” he said.

Credit…Focke Strangmann/EPA, via Shutterstock

Nearly 20 months after pandemic lockdowns first began, governments across Europe are beginning to tighten restrictions again amid the latest wave of new coronavirus cases, threatening the gains that the region has made against the pandemic.

France is racing to offer booster shots to all adults and will not renew health passes for those who refuse. Deaths are rising in Germany, with its 68 percent vaccination rate, a worrying trend for a highly inoculated country. Austria has been in a nationwide lockdown since Monday, and made vaccinations mandatory.

In Eastern Europe, where far-right and populist groups have fueled vaccine skepticism, vaccination rates are lower than the rest of the continent. Bulgaria, where a quarter of the population is fully vaccinated, is turning back to shutdowns or other restrictive measures.

The quickly deteriorating situation in Europe is worrisome for the United States, where the seven-day average of new cases has risen 24 percent in the past two weeks. (The number of new deaths reported in the United States is down 6 percent.) Trends in new cases in the United States have tended to follow Europe by a few weeks.

“Time and again, we’ve seen how the infection dynamics in Europe are mirrored here several weeks later,” Carissa F. Etienne, director of the Pan American Health Organization, told reporters on Wednesday. “The future is unfolding before us, and it must be a wake-up call for our region because we are even more vulnerable.”

The White House insists that while new infections are on the rise, the United States can avoid European-style lockdowns.

“We are not headed in that direction,” Jeff Zients, the White House coronavirus response coordinator, said this week. “We have the tools to accelerate the path out of this pandemic: widely available vaccinations, booster shots, kids’ shots, therapeutics.”

But the chief of the World Health Organization, Tedros Adhanom Ghebreyesus, said that some countries had lapsed into a “false sense of security.”

He issued a warning during a news briefing on Wednesday: “While Europe is again the epicenter of the pandemic, no country or region is out of the woods.”

Credit…Toby Melville/Reuters

The new variant that emerged in southern Africa could pose “a substantial risk to public health,” Britain’s health secretary, Sajid Javid, said on Friday, explaining a British decision to suspend flights and place six African countries on a quarantine list.

“This new variant is of huge international concern,” Mr. Javid said in a statement to Parliament while adding that no cases have yet been detected in the U.K.

Mr. Javid described the situation as fast moving and said there was a high degree of uncertainty around the spread of the virus and its possible impact. But he suggested that the signs were worrying.

“Early indications show that this variant may be more transmissible than the Delta variant and current vaccines may be less effective against it,’’ he said.

Late on Thursday Britain said it was suspending flights temporarily from South Africa, Botswana, Lesotho, Eswatini, Namibia and Zimbabwe. When they start up again, British and Irish citizens returning from these countries will be required to quarantine in government-approved hotel facilities.

Mr. Javid said that assessments were being made of the situation in other nations with strong travel links to South Africa, suggesting that the list of so-called “red list” countries could grow.

“The sequence of this variant, currently called B.1.1.529, was first uploaded by Hong Kong from a case of someone traveling from South Africa,” Mr. Javid said. “Further cases have been identified in South Africa, in Botswana, and it is highly likely that it has now spread to other countries.”

Early in the pandemic the British government was criticized for delaying the introduction of its quarantine system and the swiftness of Thursday’s move reflects a desire not to repeat that mistake.

“One of the lessons of this pandemic is that we must move quickly and at the earliest possible moment,” said Mr. Javid.

Speaking for the opposition Labour Party, Alex Norris welcomed the move but said that the emergence of the new variant reflected the “failure of the global community to distribute the vaccine” around the world.

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