Dow Futures Tumble As New COVID Strain Found in Britain; Congress Agrees $900 Billion Stimulus Bill

The Monday Market Minute

  • Global stocks slide as Britain identifies a new COVID variant that triggers strict lockdown orders for London and travel restrictions with the rest of Europe.
  • Prime Minister Boris Johnson says the new variant is 70% more transmittable than its predecessor, and may already be active in other parts of the world.
  • U.S. lawmakers agreed a $900 billion coronavirus relief package late Sunday, with votes in both the House and the Senate expected later today.
  • The U.S. dollar index surges in defensive trading overnight, while gold hits a six-week high of $1,896.00 per ounce.
  • Tesla shares slide ahead of S&P 500 debut after closing at a record high $695 per share in active Friday trading.
  • U.S. equity futures point to steep opening bell declines on Wall Street Monday heading into a holiday shortened week that includes an early close on Thursday afternoon.

U.S. equity futures fell sharply Monday, while the dollar rallied and gold traded at a six-week high, as markets reacted to the discovery of a new coronavirus variant in the United Kingdom that spreads more quickly, and could be more dangerous, than its predecessor. 

Prime Minister Boris Johnson said the new strain could be 70% more transmittable, and used its discovery to justify new Christmas lockdown orders for London that will close all non-essential shops and services and severely limit travel to and from the capital. 

Britain’s European neighbors have also enacted strict travel bans, with France closing key entry ports and cancelling all flight arrivals from U.K. airports, a move matched by most of the European Union member states. 

The discovery of a new COVID strain looks to offset market optimism for a $900 coronavirus relief package, agreed by lawmakers in Washington last night, that will ultimately deliver $600 in direct payments to American families and boost unemployment benefits by $300. Congressional lawmakers will vote on the package today, with the Senate likely to follow shortly afterwards.

Futures contracts tied to the Dow Jones Industrial Average, however, are set to tumble more than 540 points at the start of trading Monday, with those linked to the S&P 500 priced for a 76 point opening bell decline. Nasdaq Composite futures, meanwhile, are indicating a 200 point pullback.

In terms of individual stock movers, Tesla  (TSLA) – Get Report shares were active ahead of its S&P 500 debut, falling 5.5% to to indicate an opening bell price of $656.60 after hitting an all-time high of $695.00 per share on Friday and closing with a market value of $658.8 billion.

Moderna  (MRNA) – Get Report shares, meanwhile, gained 1.3% in pre-market trading after the Food & Drug Administration issued Emergency Use Authorization approval for its coronavirus vaccine Saturday.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.8% higher in overnight trading at 90.727 as investors ran for cover amid headlines linked to the U.K.’s isolation and the new London lockdown, while benchmark 10-year Treasury note yields fell to 0.91%.

Global oil prices also tumbled on the news, with U.S. crude contracts for February delivery falling $2.65 to $46.44 per barrel and Brent contacts for the same month slumping $2.80 to $49.46 per barrel.

European stocks were significantly weaker, as well, falling 2.5% from a 10-month high in early Monday trading, with Germany’s trade-sensitive DAX index slumping 2.8%. 

Britain’s FTSE 100 was marked 2% lower in early London trading, supported in part by a weaker pound, which fell nearly 2 cents against the U.S. dollar to 1.3208.

Overnight in Asia, Japan’s Nikkei 224 ended the session 0.18% lower at 26,714.42 points while the region-wide MSCI ex-Japan index fell 0.7% heading into the final hours of trading.