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SYDNEY, Nov. 26 (Reuters) – Stocks rallied, heading for their biggest weekly decline in nearly two months on Friday, as safe-haven assets like bonds and the yen rallied as a new virus variant sparked swirling concerns about future growth and higher US interest rates.
The variant, discovered by scientists in South Africa, may have the potential to evade immune responses and has prompted Britain to hastily introduce travel restrictions in South Africa. read more
South Africa’s rand fell 1% in early trading, as did US crude oil futures. S&P 500 futures fell 0.4%, while the risk-sensitive Australian and New Zealand dollars fell to a three-month low.
“The trigger was news about this COVID variant… and the uncertainty about what this means,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney. “You shoot first and ask questions later when this kind of news breaks.”
MSCI’s Broadest Index of Asia-Pacific Stocks Outside of Japan (.MIAPJ0000PUS) fell 0.2% for a weekly decline of 1% and world stocks (.MIWD00000PUS), while still near record highs, it was heading for a 0.7% weekly decline, the largest since early October.
Little is known about the new variant. However, scientists told reporters it has a “very unusual constellation” of mutations because they can help it evade the body’s immune response and make it more transmissible. read more
UK authorities believe it is the most significant variant yet and fear it could resist vaccines.
Treasury moves were sharp as it opened in Tokyo – after the Thanksgiving holiday – as interest rates quickly pulled back some of the week’s gains. The 10-year yield fell by 5 basis points to 1.5927%.
The yen rose about 0.4% to 114.91 per dollar and gold rose 0.2% to $1,792 an ounce.
The measures come amid concerns about COVID-19 outbreaks leading to restrictions on movements and activities in Europe and as prices rise aggressively in the United States next year.
Reporting by Tom Westbrook; Edited by Lincoln Feast.
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