Global stocks dropped Monday as a fast-spreading strain of coronavirus emerging from England prompted fresh travel restrictions, dealing another blow to prospects for the global economic recovery.

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Futures tied to the S&P 500 dropped 1.9%, pointing to losses at the opening bell for the benchmark stocks gauge, which ended last week at its second-highest level on record. Futures linked to the technology heavy Nasdaq-100 index fell 0.5%.

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Overseas, European shares tumbled after countries across the continent barred travelers from Britain in an effort to keep out a highly infectious variant of coronavirus that is spreading rapidly in England. The Stoxx Europe 600 slumped 2.4%, led lower by banking, energy and travel-and-leisure stocks.

“There is obviously fear on the part of policy makers,” said Paul Donovan, chief economist at UBS Global Wealth Management. “The fact it spreads faster probably does extend more restrictions for a longer period. That in turn has economic consequences."

Oil prices also retreated amid expectations that fresh restrictions on European travel and transport will pinch fuel demand heading into 2021. Brent-crude futures, the benchmark in international energy markets, lost 5.1% to $49.49 a barrel.

Oil prices fell on Monday as a continued surge in coronavirus globally forced a series of renewed lockdowns. (Getty Images)

In the U.K., where officials over the weekend tightened lockdown measures on London and the surrounding areas in an effort to contain the variant, the stocks-benchmark FTSE 100 slid 1.9%. Adding to investors’ concerns about British markets, negotiators missed a Sunday deadline for reaching a Brexit agreement, raising the prospect of a disruptive U.K. exit from the European Union at the end of the year. The value of the pound dropped 2.2% against the dollar, its biggest decline since the worst of the market rout in March, to trade at $1.32.

The border closures threaten to add further strain to European economies already struggling under restrictions designed to quell winter Covid-19 outbreaks, investors said. The British government said the new strain appeared to be spreading 70% faster than earlier variants.

“It is going to make the short term much worse than it was already going to be,” said Nicholas Brooks, head of economic and investment research at Intermediate Capital Group.

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U.S. stock futures took a hit despite an agreement struck by lawmakers on a fiscal relief package that will ease pressure on the American economy through the winter. The roughly $900 billion aid package would support consumption in the coming months, investors said. “It is more an antidepressant than a stimulant,” said Mr. Donovan. “The uncertainty here is to what extent are the $600 checks spent, and to what extent does an extra $300 a week unemployment benefit mitigate fear of unemployment for those who have jobs.”

For now, investors and economists said the impact of the mutant virus and the fresh travel restrictions was also likely to be limited for U.S. companies and markets. U.S. officials are likely to be less willing than European authorities to limit movement and business activity, they said. The variant also hasn’t been identified in the U.S. and American officials urged calm and continued caution on Sunday.

“As long as the vaccines are rolled out on schedule then by the second quarter of next year we should see activity moving back to normality,” Mr. Brooks added. The new coronavirus strain and the border closings aren’t going to change the medium-term outlook, he said.

In bond markets, 10-year Treasury yields ticked down to 0.910%, from 0.947% Friday. The dollar rose against the euro and Japanese yen as well as the pound, pushing the WSJ Dollar Index up 1%.

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European airline stocks slid Monday, with British Airways-owner International Consolidated Airlines Group down 8.9% and Deutsche Lufthansa losing 6%.

Thin holiday trading may have added to the volatility in European markets. “I think basically everybody is closed for business for the rest of the year,” said Gregory Perdon, co-chief investment officer at U.K.-based Arbuthnot Latham.

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Asian markets were mixed by the close of trading. China’s Shanghai Composite Index ended the day 0.8% higher, while Hong Kong’s Hang Seng fell 0.7% and Japan’s Nikkei 225 ticked down 0.2%.

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