Asian shares were poised for a weaker start on Tuesday, while oil prices fell, as investors worried a highly infectious new strain of COVID-19 that shut down much of Britain could lead to a slower economic recovery.
Australian S&P/ASX 200 lost 0.54% in early trading. Japan’s Nikkei 225 slipped 0.58%.
E-mini futures for the S&P 500 dipped 0.05%, after U.S. stocks mostly recovered from steep, early declines.
The question now is whether that stabilization seen during the U.S. market session will carry over to Asia, said Kyle Rodda, Market analyst, IG Markets.
”What we’re really feeling out in the markets more broadly is whether the bearishness we saw sweeping though in European trade is reflective of a broader pullback in the market. If this is a sign of things to come, or whether it’s merely a short-term shock to the system to the developments in the UK, the new virus strain,” he said.
Countries across the globe shut their borders to Britain on Monday due to fears about a new strain of coronavirus, said to be up to 70% more transmissible than the original, causing travel chaos and raising the prospect of food shortages days before Britain is set to leave the European Union.
The discovery of the new strain, just months before vaccines are expected to be widely available, renewed fears about the virus, which killed about 1.7 million people worldwide.
Oil prices dropped on expectations of lower demand, with U.S. crude recently down 0.25% at $47.85 per barrel, while Brent was 2.79% lower at $50.80.
U.S. stocks pared much of their early losses during a volatile session on Monday on hopes a long-anticipated stimulus package agreed to by congressional leaders will help spur a stronger recovery.
The S&P 500 ended the day down 0.39% at 3,694.92.
Volatility in U.S. equities jumped in thin holiday trading. The Cboe Volatility Index, known as Wall Street’s ”fear gauge,” notched its largest one-day gain since late October, even though it finished well off its session high.
MSCI’s gauge of stocks across the globe declined 0.09%.
Spot gold rose 0.22% to $1,880.36 per ounce, with the safe-haven asset hitting a one-month high earlier in the session.