London open: Stocks fall amid Covid, inflation concerns

London stocks fell sharply in early trade on Monday as worries about the spread of the Delta variant outweighed any cheer over ‘Freedom Day’, while inflation concerns also continued to weigh on sentiment .

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Worries are mounting about what the lifting of social distancing rules will mean for economic recovery, if the virus spreads more rapidly. Already many industries from hospitality to manufacturing are struggling to cope with high levels of absence as staff are pinged by the test and trace app, leading to the closure of some venues and a drop in output.

"The confusion surrounding quarantine and testing rules for international travel is also leading to fresh uncertainty about the prospects for the aviation and tourism industries, which have been struggling through the worst crisis in their history. The lack of warning about the need for travellers from France to isolate for ten days from today, has thrown holiday plans into fresh mass chaos, with hopes of a boost to summer bookings evaporating.

"Amidst concerns that infection rates could derail the recovery are worries about inflation heating up and the knock on effect of rising interest rates."

In equity markets, travel and leisure shares were the worst performers, with news that fully-vaccinated arrivals from France will still have to quarantine adding extra pressure on the travel sector. British Airways owner IAG, catering group Compass, InterContinental Hotels, Premier Inn owner Whitbread, engine maker Rolls-Royce, Cineworld, cruise operator Carnival, budget airlines easyJet and Wizz Air, and Upper Crust owner SSP all weaker.

Online supermarket Ocado was under the cosh as it faced a week of disruption after a fire at its Erith warehouse.

Neil Wilson, chief market analyst at Markets.com, said: "There is the immediate operational impact at Erith with orders being cancelled following the blaze, which was caused by a three-robot crash. There is reputational risk from cancelling swathes of orders - small I’d say - but nonetheless to be considered.

"But the main thing investors are concerned about is the safety of the technology - will this be repeated? It is only two years since the Andover facility burned down. Will this impact on future deals with international partners?"

Amid the sea of red, Ultra Electronics fell despite saying that strong demand from defence markets had helped the company deliver better-than-expected first-half profits.

AstraZeneca lost ground even as it said that its drug to treat extensive-stage small cell lung cancer had been approved in China.

Synthomer retreated even as the chemicals company lifted its full-year earnings guidance as it said trading across the business remained strong.

Market Movers

FTSE 100 (UKX) 6,914.81 -1.33%
FTSE 250 (MCX) 22,223.78 -1.08%
techMARK (TASX) 4,317.52 -1.19%

FTSE 100 - Risers

National Grid (NG.) 940.70p -0.24%
GlaxoSmithKline (GSK) 1,418.60p -0.42%
Bunzl (BNZL) 2,583.00p -0.50%
Unilever (ULVR) 4,334.00p -0.55%
Severn Trent (SVT) 2,699.00p -0.55%
United Utilities Group (UU.) 1,038.50p -0.57%
Hikma Pharmaceuticals (HIK) 2,614.00p -0.61%
SSE (SSE) 1,506.50p -0.63%
Sage Group (SGE) 693.80p -0.63%
Admiral Group (ADM) 3,266.00p -0.64%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 161.16p -3.95%
Ocado Group (OCDO) 1,747.00p -3.21%
Compass Group (CPG) 1,406.50p -3.13%
InterContinental Hotels Group (IHG) 4,560.00p -3.04%
JD Sports Fashion (JD.) 860.40p -2.96%
Rolls-Royce Holdings (RR.) 90.40p -2.86%
Whitbread (WTB) 2,841.00p -2.84%
Antofagasta (ANTO) 1,327.50p -2.78%
British Land Company (BLND) 484.80p -2.75%
Melrose Industries (MRO) 145.20p -2.58%

FTSE 250 - Risers

Baillie Gifford US Growth Trust (USA) 341.50p 1.79%
Caledonia Investments (CLDN) 3,300.00p 1.38%
TR Property Inv Trust (TRY) 469.00p 0.64%
AVI Global Trust (AGT) 969.00p 0.62%
HGCapital Trust (HGT) 368.50p 0.55%
Allianz Technology Trust (ATT) 291.50p 0.52%
European Opportunities Trust (JEO) 776.00p 0.26%
Smithson Investment Trust (SSON) 1,818.00p 0.22%
RIT Capital Partners (RCP) 2,490.00p 0.20%
Tate & Lyle (TATE) 730.60p 0.19%

FTSE 250 - Fallers

Cineworld Group (CINE) 58.32p -7.34%
Carnival (CCL) 1,323.00p -6.45%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 437.50p -4.68%
easyJet (EZJ) 791.80p -3.93%
Petropavlovsk (POG) 21.46p -3.77%
SSP Group (SSPG) 230.10p -3.72%
Restaurant Group (RTN) 111.60p -3.63%
National Express Group (NEX) 231.20p -3.59%
Spire Healthcare Group (SPI) 227.00p -3.40%
Wizz Air Holdings (WIZZ) 4,255.00p -3.36%