SYDNEY : Stocks fell and headed for their largest weekly drop in nearly two months on Friday, while safe haven assets such as bonds and the yen rallied as a new virus variant added to swirling concerns about future growth and higher U.S. interest rates.

The variant, detected by scientists in South Africa, may be able to evade immune responses and has prompted Britain to hurriedly introduce travel restrictions on South Africa.

South Africa’s rand fell 1per cent in early trade, as did U.S. crude futures. S&P 500 futures fell 0.4per cent, while the risk-sensitive Australian and New Zealand dollars dropped to three-month lows.

“The trigger was news of this COVID variant…and the uncertainty as to what this means,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney. “You shoot first and ask questions later when this sort of news erupts.”

Japan’s Nikkei was down 1.7per cent in early trade and Australian shares fell 0.6per cent. [.T][.AX]

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2per cent for a weekly fall of 1per cent and world stocks, while still near record highs, headed for a weekly fall of 0.7per cent, the largest since early October.

Little is known about the new variant. However scientists told reporters it has “very unusual constellation” of mutations, concerning because they could help it evade the body’s immune response and make it more transmissible.

British authorities think it is the most significant variant to date and worry it could resist vaccines.

Moves in Treasuries were sharp at the open in Tokyo – following the Thanksgiving holiday – as yields quickly pulled back some of the week’s gains. Benchmark 10-year yields fell 5 basis points to 1.5927per cent.

The yen jumped about 0.4per cent to 114.91 per dollar and gold rose 0.2per cent to US$1,792 per ounce. [FRX/][GOL/]

The moves come against a backdrop of concern about COVID-19 outbreaks driving restrictions on movement and activity in Europe and as markets aggressively price rate rises next year in the United States.

(Reporting by Tom Westbrook; Editing by Lincoln Feast.)

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