Shares in Aer Lingus owner IAG and Ryanair slumped by as much as 15% and 12%, respectively, as the airline and travel industry bore the brunt of a huge sell-off of European stocks prompted by heightened fears of a new Covid spread.
EasyJet and Wizz Air were both down by as much as 12% and 15% respectively, while Lufthansa and Air France-KLM shed between 10% and 13% of their share values.
Global shares tumbled and currency markets shuddered on rising fears of a new Covid strain potentially setting back all progress the world has made over the past 20 months. Europe's main exchanges - London's Ftse-100, the Dax in Frankfurt, and the CAC in Paris - all fell by over 3%.
Shares of online travel companies, including Booking.com and Expedia also fell the most since the earliest days of the pandemic, while travel sector leader TUI shed 10% of its share value.
In Dublin, the Irish Stock Exchange fell by 3%, led by heavy falls for the likes of CRH and hotel group Dalata, which was down nearly 8%. The two main banks – AIB and Bank of Ireland – shed nearly 9% and 7%, respectively.
But, arguably travel-related stocks took the biggest hammering. Airline stocks suffered their biggest losses since the early days of the Covid crisis last year after European countries moved to ban flights from South Africa; one of the identified hotspots of the new strain.
“This is the worst early Christmas present that the airline industry could think of,” said Nick Cunningham, an analyst at Agency Partners in London. “To quote Yogi Berra, this is déjà vu all over again.”
While it isn’t clear yet how serious the new virus strain is - or whether it’ll overtake the dominant delta strain - the reactions from health officials show a level of concern that could lead to major disruptions, Mr Cunningham said.
“It looks rather like a replay of delta but possibly worse,” he said. “If it plays out like delta, it’s pretty clear what happened then - you get outbreaks, country-specific restrictions, and as it spreads across the world, you get large-scale travel bans.”
Meanwhile, the risks of a new Covid hit to economic activity are clobbering expectations for interest rate hikes next year from the world's major central banks, a potential setback for the dollar and other currencies where wagers had been most aggressive.
Money markets no longer fully price a 25-basis-point interest rate rise by the US Federal Reserve by June 2022, nor are they positioned for a full 10-basis-point hike from the ECB by the end of 2022, as they were just a few days ago.
And the chances of the Bank of England raising rates next month are seen around 53%, from 75% on Thursday.
"While central bank commentary has been focused on upside risks to inflation, this (new COVID variant) highlights that there are significant downside risks and we are in a significant phase of uncertainty for the economy," said Chris Scicluna, head of economic research at Daiwa.
In an echo of the panic that swept markets when Covid was spreading early last year, oil prices slid over 6%.