Global markets strained on concerns over new COVID-19 variant

ISTANBUL – Global markets started November 26 jittery as concerns over the new COVID-19 variant and vaccines that would be less effective against it have increased.

With the ongoing increase in cases in the pandemic, the concern that the new variant may negatively affect the economic recovery brought selling pressure in the stock markets on November 26, according to Anadolu Agency.

European countries are considering imposing new restrictions amid the fourth wave of cases.

The UK stopped flights with six African countries after the news of the variant.

On the other hand, expectations that the US Fed will slow down the asset purchases earlier than expected are getting stronger by day.

The US Federal Reserve may raise interest rates sooner than anticipated and cut back on its monthly asset purchases faster if inflation continues to run high, the minutes of a recent bank meeting showed on November 25, it added.

Goldman Sachs, one of the largest investment banks in the US, said in a statement on November 25 that they expect the Fed to reduce its asset purchase rate by another US$15 billion in January and to increase interest rates 3 times in 2022.

With these developments, the US 10-year bond yield decreased by eight basis points to 1.56%, while the ounce price of gold rose by 0.5% to US$1,797.

Anadolu Agency added that in Europe, the pandemic remains at the centre of the agenda, while the meeting minutes of the European Central Bank (ECB) were followed on November 25.

It is expected that inflation will rise a little more this year and decrease next year.

The German economy grew by 1.7% in the third quarter of the year compared to the previous quarter, and by 2.5% compared to the same quarter of the previous year, in line with the expectations.

Uncertainties over the new variant have hit Asian stock markets, leading to concerns that the Chinese economy, which is already growing well below historical averages, may slow down even more.

While the softening of the ongoing strict measures in Japan is on the agenda, the new variant negatively affected the markets.

In addition, in Japan the Consumer Price Index (CPI) for November increased by 0.5% year on year, surpassing expectations, it reported.