(Bloomberg) — Just as investors were wrapping up this year’s trading, the threat of new lockdowns sent shock waves through markets across the world.

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U.S. stock index futures fell, Treasuries gained and risk-sensitive currencies slid. European stocks fell the most in three weeks, led lower by travel shares.

Lockdown risks are rising as U.K. Health Secretary Sajid Javid refused to rule out stronger measures before Christmas after the nation’s top health advisers urged more restrictions to contain sharply rising coronavirus infections. The Netherlands said Saturday it’s going to a full lockdown until at least Jan. 14. Europe’s biggest countries also are weighing more curbs to fight a surge as well.

Volatility surged, with the Euro Stoxx 50 Volatility VSTOXX Index and the VIX Index both jumping to the highest in two weeks. S&P 500 e-mini futures were down as much as 1.8% while the Stoxx Europe 600 Index dropped 2.5% by 9:06 a.m. in London.

“Markets this week and next will be for day traders with steely nerves and deep pockets, not for trend followers,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte, said in a note. “As I have repeatedly said, the winner in December is V for volatility.”

Senator Joe Manchin’s rejection of the U.S. spending package at the heart of President Joe Biden’s economic agenda heaped fresh fuel to the fire with market liquidity starting to thin as Christmas nears.

Investors snapped up bonds with yields on 10-year U.S. Treasuries slipping as much as five basis points to a two-week low of 1.35%, while those on benchmark gilts tumbled the same amount to 0.71%. Currency traders too piled into havens, with the Japanese yen rallying against most of its Group-of-10 peers.

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“The market is very jittery and obviously the news flow on omicron is not good,” said Charles Diebel, a money manager at Mediolanum. “But I’m not sure the impact will last too long. I think the combination of infections and boosters means this abates relatively quickly, ie by February, so I wouldn’t be buying bonds on the back of it.”

Asian stocks fell, with benchmark indexes down in Japan, China and Hong Kong, while India’s Sensex index looked poised to enter a correction. The MSCI Asia Pacific Index tumbled as much as 2% to trade at its lowest in 13 months amid lower volumes, with about 29 billion shares on the gauge traded Monday at the time of writing.

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Source: https://finance.yahoo.com/news/u-stock-index-futures-fall-030733739.html