This COVID variant is harming man and markets; here’s what we know

A new COVID variant that scientists say is deadlier than the Delta, and possibly resistant to vaccines, is wreaking havoc on the stock markets. On Friday, stock markets crashed worldwide while oil prices slumped, as concerns about the B.1.1.529 strain triggered a wave of risk aversion.

The variant is thought to be behind the surge in fresh cases in South Africa, and possibly in Hong Kong, too. Its discovery was officially announced on Friday by South Africa’s Health Minister Joe Phaahla, who said the concern is over the high number of mutations and the dramatic spike in cases.

Already, Israel and the UK — the latter just recovering from a fresh outbreak — have decided to ban all travel from South Africa and its neighbouring nations. The World Health Organization (WHO) is looking at whether the strain should be designated a variant of ‘interest’ or of ‘concern’.

Also read: Centre issues alert on South African COVID variant, rigorous screening on

While medical experts are still examining the virulence of the variant, administrative officials are looking at ways to curb its spread. The markets, meanwhile, are seized by uncertainly.

What makes the B.1.1.529 so scary?

The Delta variant had set the benchmark for virus virulence, and the B.1.1.529 is feared to overtake it in terms of infectiousness. The latter has 50 mutations in all, of which over 30 are on the spike protein alone. Current COVID vaccines target the spike protein, preventing the virus from unlocking access to human body cells. Hence, it is suspected — though not confirmed — that the latest variant may be able to resist vaccines.

Further, B.1.1.529 may be airborne, it is suspected. This makes it all the more difficult to contain an outbreak, since social distancing and other basic hygiene measures may not be sufficient.

So far, the concentration of cases is in southern Africa. In South Africa alone, there are over 100 cases, making it the dominant strain among new infections in that country. There have also been new cases in neighbouring countries such as Botswana. Moreover, Hong Kong has seen a couple of cases due to a traveller from South Africa.

Since most countries have already opened up international air travel, the spread may occur rapidly, as previous waves have shown. The Thanksgiving-Christmas-New Year holiday season is only likely to make implementing curbs more difficult. On the converse, strict curbs now will severely hurt holiday sales.

Why are the markets spooked?

Market confidence has been bludgeoned by fears of the new, potent COVID variant and, more importantly, its suspected resistance to vaccines. The developments are adding to the pressure of concerns over a possible tightening of monetary policy by the US Federal Reserve, which is looking to keep surging inflation at bay. Fears of fresh containment measures hammered oil prices, too.

Brokerage firm OANDA said in a note: “The one bull in the China shop that could truly derail the global recovery has always been a new strain of Covid-19 that swept the world and caused the reimposition of mass social retractions. All we know so far is the B.1.1.529 is heavily mutated but markets are taking no chances.”

Aviation and travel services firms are among the first to take a beating, in a repeat of the pattern set by the previous COVID waves. Amid fears that governments worldwide will impose curbs on travel once again, Australian carrier Qantas lost over 5% on Friday. Hong Kong-based Cathay Pacific lost more than 2%. Casino operators in Macau also lost heavily in the Hong Kong market, said media reports.

When there is uncertainty in the market, stocks and oil tend to struggle while safe-haven instruments tend to rise. Following this pattern, gold made gains on Thursday and Friday.