FTSE 100 tumbles and oil hits two-month low as Covid variant fears

A quick recap.

Britain’s FTSE 100 is on track for its worst day this year, as the emergence of the B.1.1.529 variant sends markets sliding around the globe.

The blue-chip index of London’s largest listed companies is down 190 points, or 2.6%, at 7121 points, having hit a six-week low this morning.

Travel, hospitality, oil and financial stocks are among the big fallers, on concerns that B.1.1.529 could lead to widespread new pandemic restrictions and slow the economic recovery.

Airline group IAG are currently down 14%, with jet engine maker and servicer Rolls-Royce off 10%. Conference organiser Informa (-7.5%) and hotel groups Whitbread and InterContinental (both -6.3%) are also in the top FTSE 100 fallers.

Other travel companies have been hit too, with cruise operator Carnival currently down 12.7%, holiday firm TUI off 10% and easyJet down 9.9%.

The selloff came after the UK imposed travel restrictions on a group of southern African nations as a surge in cases of the highly mutated coronavirus variant.

South Africa’s rand hit a one-year low.

European markets are also sliding, with France’s CAC shedding 3.6% and Germany’s DAX down 2.9%.

New York will join the selloff in a couple of hours, with the Dow Jones industrial average down over 2% or 800 points in pre-market trading.

Oil has slumped to a two-month low, with Brent crude off 6% at $77.35 per barrel, on concerns that the global economic recovery could be hit. Industrial metal prices have also weakened.

Wall Street’s fear index, the VIX, has surged, while cryptocurrencies have also tumbled as investors ditch riskier assets. Bitcoin is down almost 9% today, putting it into a bear market (more than 20% off its recent high).

Joshua Raymond, director at financial brokerage XTB, says:

“The new Covid variant has created uncertainty in the markets today, with investor appetite shying away from risk. As a result, we have seen European stocks start the day in sell off mode with the FTSE 100 and DAX30 both falling 3%.

The main worry right now is the potential for this variant to evade the vaccines. This is the immediate concern amongst investors right now and their first move as a result has been portfolio protection.

If this variant proves more potent and threatens the success of the vaccine rollout, its hard to see a bigger threat to market stability right now.”