Shares of airlines fell and vaccine makers rose Friday as investors reacted to fresh travel bans related to a variant of the coronavirus that causes COVID-19 called B.1.1.529, that has been identified in South Africa.
Meanwhile, stocks relating to ‘stay-at-home’ activities gained.
The UK government has banned flights from South Africa and five other southern African countries, the Associated Press reported. The World Health Organization’s technical working group is meeting Friday to discuss the variant.
“A lot of eyes will be on how severe it is and whether it completely evades vaccines,” analysts at Deutsche Bank said Friday in a research note. “At this stage very little is known. Mutations are often less severe so we shouldn’t jump to conclusions but there is clearly a lot of concern about this one.
“Also South Africa is one of the world leaders in sequencing so we are more likely to see this sort of news originate from there than many countries. Suffice to say at this stage no one in markets will have any idea which way this will go.”
The new strain will likely be given the Greek letter “nu” if the World Health Organization determines that it merits being named, according to Evercore ISI analysts.
The strain has reached 90% of cases in Gauteng, which is the smallest province in South Africa with more than 1,000 cases a day being estimated, according to Evercore analyst Josh Schimmer.
The strain “(may have evolved in an immune compromised patient) has 32 mutations in the spike protein (including some in the RBD) and is reportedly the “most distant” (i.e. mutated) from the original strain yet,” Schimmer wrote in a note to clients. “It has RBD and NTD mutations associated with resistance to neutralizing antibodies, and has potentially enhanced transmission.”
The CBOE Volatility Index VIX, +48.12% jumped by about 8.6% Friday morning, trading around 24.70, which would mark the highest level for the index since September.
The index, also known as the VIX, for its ticker symbol, has become well known as Wall Street’s “fear gauge,” since it was created in the early 1990s.
Pfizer PFE, +5.78% advanced by 7.4%, and Moderna MRNA, +21.50% rallied 23% on the news. Aircraft maker Boeing BA, -6.63% retreated by 7%, Southwest Airlines LUV, -3.29% fell 4.7%, American Airlines AAL, -10.38% stock slumped 8.5%; Expedia EXPE, -9.96% fell 10% and United Airlines UAL, -10.68% dropped 9.9%.
Delta Air Lines DAL, -9.75% lost 9%, Norwegian Cruise NCLH, -12.99% gave up 9.8% and Royal Caribbean RCL, -12.70% shares slid 10%.
Netflix NFLX, +1.67% rose 2% and Take-Two Interactive Software TTWO, +3.81% rose by 2.4%.
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