US Stock market down by 500 pts amid new COVID strain discovery 'Omicron' in South Africa

Nearly two days after scientists of South Africa identified a new version of the Coronavirus called B.1.1529, Omicron, the stocks sank drastically on Friday. The Standard and Poor (S&P) 500 index dropped 106.84 points, or 2.3%, to close at 4,594.62. Citing the top trading experts of the United States, news agency AP called November 26, Friday as one of the worst days for Wall Street’s benchmark index since February this year. Notably, the drastic effect on the stock market came after South Africa, which has already been facing the burnt of the COVID-19, announced the detection of the new COVID variant in their country.

The announcement prompted several countries to either shut their travel routes or implement robust restrictions. With the detection of the new variant in Gauteng, the country’s most populous province, the World Health Organisation also sent a delegation of experts to collaborate with scientists to fasten the action needed to curb the spread of the infection. This resulted in the collapse of the global market including, banks, travel companies and energy companies. Since the WHO announced that the new COVID variant is highly transmissible, the investors tried to reposition to protect themselves financially from the Omicron. 

Energy market suffers huge loss 

As far as the oil market is concerned, the stocks fell about 13% after the WHO announcement, triggering worries to world leaders about the arrival of another slowdown in the period of two years. Meanwhile, the shares of Exxon-- an American multinational oil and gas corporation-- fell nearly 3.5% while Chevron-- the second-largest oil company in America-- fell 2.3%. The blue chips closed down 905.04 points to end the day at 34,899.34. The Nasdaq Composite lost 353.57 points, or 2.2%, to 15,491.66, reported AP.  "Investors are likely to shoot first and ask questions later until more is known," AP quoted Jeffrey Halley of Oanda as saying in a report. 

Airline stocks quickly sold off

Halley noted that the earlier delta variant had also devastated the global market after the Indian health authorities announced the detection of the highly infectious variant around April this year, but this time, he pointed that the Omicron has a larger impact as compared to earlier.  Apart from the energy sector, airline stocks too suffered a massive downfall since the WHO announcement. As per AP, airline stocks quickly sold off, with United Airlines dropping 9.6% and American Airlines falling 8.8%. "COVID had seemingly been put in the rear-view mirror by financial markets until recently," AP quoted Douglas Porter, the chief economist at BMO Capital Markets. "At the least, (the virus) is likely to continue throwing sand in the gears of the global economy in 2022, restraining the recovery (and) keeping kinks in the supply chain," added Porter.

Meanwhile, the recent COVID-19 spike has also impacted the digital currency market as Bitcoin got caught up in the selling. According to CoinDesk, the digital currency dropped 8.4% to $54,179 on Friday.  On the other hand, when the reporters asked US President Joe Biden about the devastating situation of the stock market, he replied, "I expected it." "They always do when there’s something on COVID (that) arises," Biden said. "We don’t know a lot of the newer COVID variant, except that it is of grave concern, it seems to spread rapidly," Biden told correspondents.

With inputs from AP

Image: Pixabay/AP