Markets retreat on fears of new coronavirus strain

Stocks fell on Monday as stricter curbs to fight a fast-spreading new strain of the coronavirus prompted travel bans, worries about food shortages and further economic pain. European shares had their worst session in almost two months, while the London market slipped and the S&P headed for its worst drop in almost eight weeks.

Dublin

The Irish index of shares fell 1.6 per cent to 7302, dragged lower by a slump in heavyweight stocks.

CRH declined almost 3 per cent over the session to end the day at €33.75, while Kerry Group was almost 1 per cent off at €119.70.

Packaging group Smurfit Kappa saw its stock slump 3.15 per cent to €37.50 over the day.

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Ryanair's stock dipped more than 4.5 per cent to close at €15.56 after the airline cancelled 12 international and domestic UK routes on Monday, blaming a sudden change of Brexit-related policy by the UK Civil Aviation Authority that made their operation impossible. Travel stocks were among those hit by the travel ban to and from Britain implemented by a number of countries in a bid to stop the spread of a new mutation of coronavirus.

London

UK mid-cap stocks suffered their worst day in three months on Monday, with the domestically-focused FTSE 250 down 2 per cent as the latest development in the pandemic added to investors’ worries, with no Brexit trade deal in sight and just 10 days to go until a transition period expires.

Several nations closed their borders to Britain, sending the blue-chip FTSE 100 down about 1.7 per cent despite a sharp slide in the pound.

BP and Royal Dutch Shell weighed the most on the index, with Shell also taking a hit after it said it would write down the value of its oil and gas assets by between $3.5 billion and $4.5 billion.

Travel and leisure stocks, including British Airways owner IAG, EasyJet and InterContinental Hotels Group, shed between 1 per cent and 8 per cent after countries cut transport ties with Britain.

Stay-at-home winner Ocado Group jumped by about 6 per cent while precious metal miners, including Fresnillo, added 1.6 per cent as safe-haven demand drove gold prices higher.

Europe

Broad-based losses pushed the pan-European Stoxx 600 index down 2.3 per cent, its lowest close since mid-November.

A plunge in the pound limited losses in London's FTSE to 1.7 per cent, while main indexes in Germany, France, Spain and Italy all dived close to 3 per cent. Spain's Ibex posted its worst day in six months.

Travel and leisure stocks had their worst day in three months, with Trainline and travel company TUI down. Cruise operator Carnival shed 5.6 per cent.

As crude oil prices slid, energy companies BP, Total and Royal Dutch Shell lost almost 5 per cent, leading losses in Europe.

Shell was further weighed down by a $3.5 billion to $4.5 billion writedown in the value of oil and gas assets.

Banks lost 3.6 per cent – their worst day since September, as risk aversion sent investors fleeing to the safety of bonds.

Worries about the new virus strain also reduced the impact of an agreement on a $900 billion (€739 billion) fiscal aid package in the United States that will be voted on Monday.

Vaccines should still be effective against the new strain, scientists said. Britain has already rolled out the Pfizer-BioNtech vaccine, while the European Medicines Agency approved the vaccine on Monday. A European Commission nod is expected later in the day for a European roll out. Frankfurt shares of BioNtech rose 1.7 per cent.

New York

The S&P 500 Index slumped less than 1 per cent, dragged lower by losses for Tesla Inc, which fell as much as 6 per cent on its first day after being added to the US benchmark.

Institutional buying of Tesla surged late on Friday as index-tracking managers rushed to add the shares to their funds. Almost $60 billion worth of stock changed hands at $695 a share, most of it in one giant trade in the session’s waning seconds. The price was about 5 per cent higher than Tesla’s level just prior to the close.

The Dow Jones Industrial Average fared better as Goldman Sachs Group rallied after regulators approved a stock buyback.

Big-bank stocks climbed in early trading after lenders including Goldman Sachs and JPMorgan Chase and Co said they would take up the Federal Reserve on its surprise decision letting them resume stock buybacks. Goldman and Morgan Stanley were viewed as top winners on the heels of their trading profits.

The yield on 10-year Treasuries retreated and the dollar climbed. – Additional reporting: Reuters, Bloomberg