finance

Pound hits five-month low vs dollar and bitcoin drops amid Covid-19 worries – business live


“As new cases surged in the UK, heightening concerns over new lockdowns in the western world’s most vaccinated country and what this would mean for the rest of the globe, it becomes apparent that the consequences of Covid-19 will remain with us for some time.

These may include local lockdowns, sustained supply chain pressures (and thus inflation), volatility in earnings and the general macroeconomic environment as well as possible social tensions as governments struggle to increase vaccination levels. What is slightly remarkable is that pandemic concerns don’t seem ongoing, but rather work in a risk-on/risk-off pattern. In March 2020, markets were passively watching Covid-19 in Wuhan and only panicked when the first European victim was reported. Similarly, the Delta variant has been concerning scientists for a few months, but market action was abrupt

“The confluence of lower oil prices, Delta concerns, expensive valuations and increased retail participation in equity markets during the last year explain a lot of what happened yesterday. Markets ended another long period of very low volatility, and, despite the positive note at the end of the session yesterday, we wouldn’t be too surprised if the correction persists for a while, until some of the retail-driven speculation is flushed out of markets.



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