New Covid variant rattles markets - InvestingChannel

October 31, 2024

New Covid variant rattles markets

by InvestingChannel0273

Proprietary Data Insights

Financial Pros Stay-At-Home Searches This Month

RankNameSearches
#1Activision Blizzard520
#2Amazon468
#3Shopify317
#4Etsy176
#5Teladoc126

Black Friday starts at home

This year is expected to be light on deals as supply chains struggle to keep up.

A possible new Covid strain in South Africa already has governments on edge.

Facing rising caseloads, Austria imposed severe lockdowns while Germany refused.

As the pandemic shifts to an epidemic, we expect the push to online fulfillment to embed itself more in society.

Take a recently little-covered story regarding Kroger (KR). 

In Florida, Publix dominates the grocery supermarket market.

Kroger decided to enter, not with physical stores, but entirely online delivery.

Even with fewer SKUs, Kroger’s model delivers similar items as Publix with its Shipt partnership at 75% the price.

Considering the population of Florida, that’s a major move for the largest grocer in the US.

And it speaks to how big business is ignoring traditional brick and mortar entirely when entering new markets, a trend we expect to continue and grow especially as the pandemic persists.

Covid

New Covid variant rattles markets

Key Takeaways

  • A Covid strain with 50 possible mutations caused a sharp rise in cases in South Africa.
  • European nations temporarily banned travel from South Africa to keep the virus in check.
  • WHO officials are meeting to decide whether the bug classifies as a new variant.
  • Stay-at-home stocks rose while travel and oil retreated on a light volume trading day.

Markets cratered during a shortened Friday trading session.

The reason – fears of a new Covid variant detected in South Africa.

Here’s what we know

Known as B.1.1.529, the new ‘variant of concern’ scared WHO officials into an emergency meeting. 

  • The majority of cases were found in South Africa, a country of 60 million, where total Covid cases rose from 300 two weeks ago to 2,465 on Thursday.
  • With 50 possible mutations, officials worry the strain is more transmissible and resistant to vaccines and treatments.
  • Single-digit cases have been found in Hong Kong and Israel.

Global stocks plunged amidst new travel restrictions to South Africa. Investors worry this is just a harbinger for more public health measures to come.

A tense situation gets worse

With vaccination rates stalling and Covid cases rising, Austria resorted to draconian measures, imposing lockdowns on those without proof of vaccination before extending them to the entire population.

German Health Minister Jens Spahn went as far as to say that by the end of this winter, everyone in Germany would be vaccinated, recovered, or dead.

Despite rising cases, Germany decided not to impose a lockdown in recent weeks.

As we close our 2nd year with Covid, constant vigilance has worn down on many. And fragile supply chains can’t handle more starts and stops.

Back to the lockdown trade

Harkening back to the early days of the lockdown, travel and related stocks sold off hard while stay-at-home plays like Peloton (PTON) and Zoom (ZM) saw shares bid up.

Crude oil also tumbled as demand concerns piled onto a coordinated release of strategic oil reserves from the U.S., China, and several other major energy consumers.

The bottom line: U.S. equity markets are only open until 1 p.m. EST today.

Most of the trading is done by computers on days like today. 

With lower volume, trends can be exacerbated.

Right now, we simply don’t know enough.

Let markets digest the information over the weekend and early next week before making any long-term investment decisions.

It may be worth sending your clients a quick note to that effect over the weekend.