With several countries including France closing their borders with Britain owing to the new strain of virus, huge queues of lorries are building outside the country’s ports. ©AFP BEN STANSALL

Hong Kong (AFP) – Concerns about soaring virus cases and new lockdowns pushed equities down again Tuesday, while fears over a new strain in Britain and stuttering Brexit trade talks were keeping the pound under pressure.

The mutated virus, which is said to be 70 percent more transmissible, has forced numerous countries around the world to shut their borders to the UK and has overshadowed the rollout of vaccines and news that US lawmakers had agreed a new stimulus.

Analysts said investors were taking the opportunity to cash in recent gains as they wound down for the festive break, with most saying 2021 will see a surge across markets as the economy opens up after people are inoculated.

However, they pointed out that the long-term optimism is being kept grounded by concerns about the immediate impact of the latest wave of infections.

“What we’ve seen out of the UK is a scary thing for the markets, which could incentivise some profit-taking,” Steven Wieting, at Citigroup Private Bank, told Bloomberg TV. But the vaccination drive should be a “game-changer”, he added.

Tokyo, Hong Kong, Shanghai and Seoul were all in the red, while Sydney shed 0.9 percent as investors grew increasingly worried about a spike in new infections in the city that has led to the imposition of containment measures.

There were also losses in Taipei, Singapore, Jakarta and Manila, though Wellington rose.

The losses extended Monday’s sell-off and a retreat on Wall Street.

– Pound struggles –

Axi strategist Stephen Innes sounded a note of warning for early next year.

“You will read a lot of after-the-fact analysis suggesting (Monday) was a holiday-exaggerated selloff,” he said in a note. “To a large degree, that might be the case on some overbought positions like oil and short dollar.

“However, ignoring these early warning signals and not bracing yourself for a challenging start to 2021 is flat-out dumb. Indeed, this could only be the tip of a reflationary washout.

“The risk is growing for significantly extended lockdowns in several countries. There is a gap to be bridged between now and when experts expect herd immunity — in the middle of the second quarter at the earliest.”

On currency markets, the pound was slightly higher than Monday’s lows, which were fuelled by concerns over the new virus strain and a lack of progress in Brexit talks.

But with just under two weeks until a deadline for an agreement, the two sides remain stuck on access to fishing grounds and there are worries Prime Minister Boris Johnson could walk away empty-handed.

There are hopes that his offer of a compromise on the fishing issue could break the deadlock, though French Europe Minister Clement Beaune warned: “There have been successive proposals from the UK, sometimes on fishing, that don’t respond to European priorities and demands.” 

He added: “Difficulties remain.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.4 percent at 26,613.09 (break)

Hong Kong – Hang Seng: DOWN 0.2 percent at 26,260.42

Shanghai – Composite: DOWN 0.4 percent at 3,405.63 

Pound/dollar: DOWN at $1.3418 from $1.3436 at 2145 GMT

Euro/pound: UP at 91.15 pence from 91.00 pence

Euro/dollar: UP at $1.2233 from $1.2229

Dollar/yen: UP at 103.40 yen from 103.32 yen 

West Texas Intermediate: DOWN 0.6 percent at $47.67 per barrel

Brent North Sea crude: DOWN 0.5 percent at $50.65 per barrel

New York – Dow: UP 0.1 percent at 30,216.45 (close)

London – FTSE 100: DOWN 1.7 percent at 6,416.32 (close)

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.