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Why the Stock Market Was Rattled by the New Coronavirus Strain in the U.K.

A new coronavirus strain first found in the United Kingdom recently sparked concerns among investors. The stock market fell initially on the news about the mutated version of SARS-CoV-2 and could experience increased volatility as the strain spreads. In this Motley Fool Live video recorded on Dec. 23, 2020, Healthcare and Cannabis Bureau Chief Corinne Cardina and writer Keith Speights talk about exactly why the stock market was rattled by the new coronavirus strain found in the U.K. and what it could mean for COVID-19 vaccines.

Corinne Cardina: Let’s talk about the news that has been coming out of the U.K. So there has been reported a more transmissible mutation of the virus, and the officials in the U.K. have said it could be up to 70% more transmissible than the original strain. Keith, why are the markets reacting so dramatically, and what do investors need to know about this mutation?

Keith Speights: Well, Corinne, we started off talking about how we’ve had so much good news, and this is some bad news. The reason why the markets are reacting so significantly is, there are just concerns about more shutdowns. We’re already seeing travel restrictions imposed with the United Kingdom, where the strain first appeared. A lot of European countries are saying we don’t want any flights coming in, we don’t want any travelers coming in from the U.K., and other countries are following suit.

There’s a real concern that this more highly transmissible strain could lead to more shutdowns and beyond just travel bans, and that could have an adverse impact on the global economy. I think that’s a real concern, a legitimate concern for investors.

I think the real challenge here is that the strain could spread so quickly. The CDC even says that the new strain could already be in the United States, and we just haven’t detected it yet. I wouldn’t be surprised if that’s the case. Really, it’s very difficult, if not impossible, to completely prevent the spread of a new strain of a virus like this, so it could become more of an issue. The real thing here is that the fear of the unknown always tends to spook investors, and this is just a big unknown that’s been thrown into the picture, and it’s causing some worries among investors.

Cardina: Absolutely. That uncertainty is definitely looming when we all thought we were heading toward resolving a lot of the uncertainty we’ve been grappling with for the past few months. So I think part of the question related to this new strain is about the vaccines that we already have. What does this new, more transmissible strain mean for the vaccines that were developed based on the original strain? What do we know about that? Read from source….