London close: Stocks fall, pound dips amid Covid and cross-channel chaos
London stocks closed well into negative territory on Monday, along with the pound, as investors were rattled by a new strain of Covid-19, a UK travel ban, border chaos and a missed Brexit deadline.
The FTSE 100 ended the session down 1.73% at 6,416.32, and the FTSE 250 was 2.11% weaker at 19,962.11.
Sterling was 1.27% weaker against the dollar to last trade at $1.3351, and slid 0.82% on the euro to €1.0921.
“Health woes are back at the forefront of traders’ minds as the new strain of Covid-19 that is doing the rounds in the UK has brought about tougher restrictions,” said CMC Markets analyst David Madden.
“It is bad enough that large portions of Britain will have to deal with harsher restrictions because of the fear surrounding the fast spreading strain of the coronavirus, but now many countries are distancing themselves from the UK.
“Belgium, the Netherlands and Ireland have imposed bans on flights from Britain. France has taken more drastic action as its ban also includes freight that has been handled by humans.”
Madden noted that there had been reports about shortages of vegetables at shops on account of the disruption brought about by the situation
“The isolation treatment the UK is receiving has rocked market confidence all over Europe.
“Seeing as the new strain of Covid-19 is at the root of this problem, there are fears that other countries might have already been infected too.”
Brexit talks had missed Sunday’s deadline, but were set to continue, after EU negotiator Michel Barnier said they had reached a "crucial" stage.
Covid concerns also weighed heavily on sentiment after London and the South East of England were plunged into tougher ‘Tier 4’ restrictions over the weekend, due to a new strain of the virus that is believed to be significantly more transmissible, but not more virulent.
That was compounded by a travel ban as a number of countries including France, Italy, the Netherlands, Belgium and Germany halted flights from the UK, all due to the new Covid variant.
In addition, France closed its border to all traffic including freight overnight on Sunday, causing the Port of Dover and the Eurotunnel to close.
UK Transport Secretary Grant Shapps insisted earlier that the UK would not ask for an extension to the Brexit transition period, despite chaos at UK ports.
The World Health Organisation confirmed that the new strain of Covid, which was said to be up to 70% more transmissible, was first identified in the South East of England in September.
It had also been identified in other countries such as the Netherlands and Denmark.
“No Brexit deal, a new strain of the coronavirus, stricter lockdowns and the closure of key trade routes to the EU - merry Christmas everyone,” said Neil Wilson, chief market analyst at Markets.com.
“This is the kind of near-term volatility we can expect until the full force of vaccines is felt.
“There has been a lot of hope already priced in with the vaccine-inspired November rally so we cannot expect a straight line higher for stocks.”
Wilson said that unfortunately, tougher Tier 4 restrictions could be in place until the Spring, so corrections of such nature were to be expected.
“The cavalry may be coming, but the homesteaders need to batten down the hatches and face another onslaught before they arrive.”
Amid the doom and gloom, a bright spot emerged from across the pond, as US legislators finally agreed on a $900bn Covid package overnight, though it did nothing to lift the mood.
Unsurprisingly, stocks with large exposure to the Covid-19 pandemic and related restrictions suffered the brunt of the selling, with British Airways owner IAG down 7.96%, budget airline easyJet falling 7.21% and central Europe-focussed carrier Wizz Air 3.62%.
Engine maker Rolls-Royce and GKN owner Melrose Industries were also under the cosh, by 3.25% and 2.66%, respectively.
BP lost 4.9% and Shell gushed 6.14% lower as oil prices dropped, with Shell also in focus after saying it was writing down $3.5bn to $4.5bn in the value of its oil and gas assets next year as it assessed the current impact of the coronavirus pandemic on fourth quarter operations.
Cineworld was down 5.33%, cruise operator Carnival lost 5.58%, travel firm TUI slipped 0.98%, pub chain J D Wetherspoon was off 3.55% and travel-focussed stationer WH Smith was 4.3% weaker.
Shopping centre owners British Land and Hammerson were also hit, falling 0.73% and 11.73% respectively, amid worries about the impact of the closure of non-essential shops.
Mike Ashley’s Frasers Group fell 8.78% after saying it was pulling full-year guidance after the UK government closed non-essential retail stores in response to a new variant of the coronavirus breaking out in London and the South East.
On the upside, precious metals miners Fresnillo and Centamin shone as gold prices rallied, adding 2.28% and 3.84%, although peer Polymetal reversed earlier gains to fall 0.15%.
Metro Bank shares surged 23.08% after it agreed to sell a mortgage portfolio to NatWest in a £3.1bn deal, while NatWest stock slumped 2.48%.
Online supermarket Ocado and Just Eat Takeaway - both of which had previously benefited from Covid restrictions and lockdowns - were in the green, rising 5.69% and 1.88%.
Market Movers
FTSE 100 (UKX) 6,416.32 -1.73%
FTSE 250 (MCX) 19,692.11 -2.11%
techMARK (TASX) 4,001.20 -1.76%
FTSE 100 - Risers
Ocado Group (OCDO) 2,319.00p 5.57%
Fresnillo (FRES) 1,155.00p 2.28%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,126.00p 1.88%
Reckitt Benckiser Group (RB.) 6,532.00p 1.21%
Admiral Group (ADM) 2,973.00p 0.99%
Pennon Group (PNN) 942.60p 0.94%
Ashtead Group (AHT) 3,371.00p 0.63%
Pershing Square Holdings Ltd NPV (PSH) 2,420.00p 0.62%
Spirax-Sarco Engineering (SPX) 11,315.00p 0.62%
Croda International (CRDA) 6,354.00p 0.32%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 144.00p -7.96%
Royal Dutch Shell 'B' (RDSB) 1,265.00p -5.67%
Royal Dutch Shell 'A' (RDSA) 1,312.00p -5.01%
BP (BP.) 258.05p -4.90%
Legal & General Group (LGEN) 243.60p -4.88%
Avast (AVST) 514.50p -3.92%
Lloyds Banking Group (LLOY) 33.54p -3.78%
Aviva (AV.) 313.80p -3.65%
Evraz (EVR) 462.40p -3.31%
Burberry Group (BRBY) 1,760.50p -3.30%
FTSE 250 - Risers
Network International Holdings (NETW) 290.00p 4.39%
Centamin (DI) (CEY) 124.50p 3.84%
Dechra Pharmaceuticals (DPH) 3,362.00p 2.45%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,126.00p 1.88%
Hochschild Mining (HOC) 208.80p 1.86%
Essentra (ESNT) 299.60p 1.56%
888 Holdings (888) 283.50p 1.25%
Ferrexpo (FXPO) 285.60p 1.20%
Signature Aviation (SIG) 373.10p 1.14%
Smithson Investment Trust (SSON) 1,674.00p 0.72%
FTSE 250 - Fallers
Hammerson (HMSO) 22.81p -11.73%
Trainline (TRN) 418.00p -10.50%
Frasers Group (FRAS) 425.00p -10.40%
Apax Global Alpha Limited (APAX) 177.40p -9.03%
Oxford Instruments (OXIG) 1,942.00p -7.88%
Liontrust Asset Management (LIO) 1,185.00p -7.78%
Petrofac Ltd. (PFC) 141.70p -7.72%
FirstGroup (FGP) 67.75p -7.64%
easyJet (EZJ) 758.00p -7.21%
Dixons Carphone (DC.) 114.80p -6.96%