(Bloomberg) — U.S. stock index futures sharply dropped as a new Covid-19 strain discovered in southern Africa spooked investors, sending stock markets around the global deep into the red.

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S&P 500 mini futures were down 1.8% as of 8:52 a.m. London time, while the Nasdaq futures declined 1.1% and Dow futures were 2.2% lower.

“Every trader in New York will be rushing to the office now,” says Salm-Salm & Partner portfolio manager Frederik Hildner, adding that news of the new variant could mean the end of the inflation and tapering debate.

Volumes jumped, with the S&P 500 futures seeing about 208,000 contracts traded, compared with a 30-day average of 77,000 at this time of day. European markets tumbled at open, with the Stoxx Europe 600 falling 2.8% with travel and banking stocks leading the decline.

“The news, and the uncertainties that it brings, are likely to have triggered profit-taking and stop-loss limits,” said Comdirect Bank strategist Andreas Lipkow.

The World Health Organization and scientists in South Africa are studying the recently identified variant, which has been described as very different to previous versions and of serious concern. The U.K., Singapore and Israel curbed travel from South Africa and some neighboring countries. Hong Kong confirmed two cases of the strain.

“Markets were approaching overbought conditions, meaning they needed a pretext to slump,” said Cedric Ozazman, chief investment officer at Reyl & Cie. “I am not sure it will last too long. It’s a healthy consolidation so it’s still possible to get some downside exaggeration but this would represent opportunities to buy the dip.”

Story continues

The U.S. equity market was closed on Thursday for the Thanksgiving holiday.

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