Wall Street opens in the red as fears over new COVID-19 strain triggers selloff

The main indices on Wall Street were a sea of red of Monday morning as panic began to spread over a new strain of COVID-19, overshadowing news of the stimulus package recently agreed by US politicians. Shortly after the opening bell, the Dow Jones Industrial Average was down 0.53% at 30,017 while the S&P 500 fell 0.82% at 3,679 and the Nasdaq dropped 0.58% to 12,681. News of a faster spreading version of the virus in the UK has hit sentiment across the board as countries begin closing their borders again to prevent the infection reaching their own populations. Nations including Italy, India, Canada as well as the city of Hong Kong have already closed their borders to holders of UK passport holders. Alongside the new strain in the UK, surging cases of COVID-19 in the rest of Europe and in the US state of California have also caused jitters in the market. “Risk appetite did not stand a chance as the virus rages on in Europe and across California.  Virus cases in the UK are being attributed to a mutation of the virus that allows it to spread faster.  The new virus strain will likely force tighter restrictions across Europe”, said OANDA’s Edward Moya. “The situation in California, the state that has the biggest share of the US economy at over 14%, is out of control.  The last several weeks of limited restrictive measures now have the death toll spiralling higher.  California’s ICU capacity has fallen to low single digits and hospital staff is stretched thin.  The short-term outlook is very bleak, but optimism is still high that by the fall things will closely be back to normal.  Some investors are eyeing every dip, but that doesn’t mean Wall Street shouldn’t expect 3-5% weakness before trading is done for the year”, he added. 8.00am: Wall Street to start lower as jitters over new COVID strain offsets news of stimulus deal US investors are preparing to get their tin hats on as pandemic panic spreads across the globe. The Dow Jones Industrial Average is expected to open around 375 points lower at 29,804 while the S&P 500 is on course to shed 52 points at 3,657. The Nasdaq Composite can sometimes be relied upon to rise when the other main indices are heading south but not today; the index is tipped to open at around 12,588, down 168 points. Despite an agreement being reached on a fiscal stimulus bill for the US in response to the coronavirus (COVID-19) pandemic, US investors look set to participate in the global sell-off, which has been sparked by fears that more draconian lockdown measures will be needed to try to curb the disturbing rise in COVID-19 infections. There were 189,000 new COVID-19 cases reported yesterday, down 2,000 or so (1.1%) from Sunday of the week before. In the week through Sunday, the total number of confirmed new cases rose by 0.5% week-on-week. The picture looks less bleak when results from California are stripped out, said Ian Shepherdson, the chief economist at Pantheon Macroeconomics. “Cases in California are now rising faster than anywhere else, with yesterday's 46K increase up an alarming 53% from the previous Sunday. Only 13 other states reported week-to-week increases yesterday, but California is the most populous state in the country so its numbers are big enough to offset the progress being made elsewhere,” he noted. There is little of note scheduled for release in the US today according to the macroeconomics diary. As for equities, Tesla shares were off the pace in pre-market trading, shedding 3.9% at US$667.91 on the first day of their inclusion in the S&P 500. Three things to watch for on Monday: The company results calendar is once again relatively thin in the run-up to Christmas, however, investors may be on the lookout for fourth quarter earnings from aerospace and electronics firm Heico Corp (NYSE:HEI) Investors may also be keeping an eye on the progress of Brexit negotiations across the Atlantic as both sides resumed talks despite missing yet another deadline on Sunday. The outcome of the last-minute talks is likely to cause movement in the value of the pound Additionally, oil prices will be in focus amid concerns that the new strain of highly infectious and subsequent raft of border closures and travel restrictions could dent demand into the new year