US Dow Loses More Than 2%, Global Oil Prices Drop by 11% on New COVID-19 Variant Fears

WASHINGTON (Sputnik) - The Dow Jones industrial average on Friday plunged at open by about 800 points or 2.5% amid concerns over a newly detected variant of COVID-19.

The sell-off comes after the discovery of the new COVID-19 variant, known as B.1.1.529 in southern Africa, which has more mutations to the "spike protein" than past variants, meaning that it could hamper the body's immune response and spread more easily.

Global oil prices also took a hit amid fears that the emergence of a new strain, possibly resistant to vaccines, would result in a global economic activity slowdown akin to the one witnessed in 2020 and hence a reduced demand for crude. The benchmark blend of oil, Brent, took a dive by 11.26% from $82.26 down to around $72.84 per barrel. The American benchmark blend, WTI, in turn, lost 12.57%, slipping from $78.28 down to $68.16 per barrel as of 16:52 GMT.

The fall places current oil prices at a two-month low not seen since 22 September. For the last two months prices for crude have been rallying amid growing demand that has even prompted the US to open up some of its oil reserves.

Hospitality Businesses Suffer Market Losses

European markets experienced a sell-off earlier today, with Stoxx's index, gauging performance of 600 companies across 17 European states falling by 3.6%. French CAC index lost almost 4%, while Germany’s Dax went down by 3.1% over the day.

The airline companies have taken a hard hit amid news that not only indicates a reduction of flights to Africa. This matter also highlights the risks of new lockdowns and closure of flights across the world. The emergence of a new COVID strain has also sent ripples across the hospitality industry's market shares.

The International Consolidated Airlines Group, which includes British Airways and Iberia Airlines, lost almost 14% in one day. The shares of Germany’s Lufthansa, in turn, nosedived losing 10.72% in market value on the news of the new variant. The InterContinental Hotels group went down by 5.92% over the day. Major cruise operator Carnival dropped by 10.1% during the day.

New Strain of Coronavirus

The global markets scare about the B.1.1.529 variant of COVID-19 only deepened amid reports that the first cases of it were spotted in Israel and Belgium. Previously it was found in South Africa and Botswana as early as 11 November.

Responding to the emergence of the new strain with "extremely high" number of mutations, the World Health Organisation (WHO) announced an emergency meeting of the Technical Advisory Group. The WHO noted that additional studies are required before one can say just how dangerous the new strain is.