London pre-open: Stocks to slide on worries about new Covid variant
London stocks were set to tumble at the open on Friday following heavy losses in Asia, amid worries about a new Covid variant found in South Africa.
The FTSE 100 was called to open 120 points lower at 7,190
CMC Markets analyst Michael Hewson said: "After what was a fairly lacklustre session yesterday, European markets closed the day higher, despite concerns about how the new German government will deal with the continued surge and hospitalisations and deaths that are rippling out across the country.
"This fairly subdued tone has been replaced in Asia trading this morning by a huge sell off on concerns over a new more transmissible variant of the coronavirus identified in South Africa, and which has also been detected in Hong Kong. This variant which, it is understood, contains up to 30 identified mutations, has prompted WHO officials to call an emergency meeting to discuss what it means for vaccine efficacy as well as other treatments. The new strain has also prompted the UK government to implement flight bans from six African countries over concern as to what this might mean for infection rates, and other ripple out effects.
"For the moment it is understood that the number of cases is small, but due to the thin liquidity levels in Asia trading as a consequence of the US holiday the reaction does appear to be outsized, with a surge into bonds, sending yields plunging, and gold higher."
In corporate news, Essentra said it had decided to start a strategic review of its packaging division as it continued to move towards becoming a pure play components business.
The company said the review would run in parallel with the previously announced strategic review of its filters unit.
It also said chief financial officer Lily Liu was leaving to take up a new role at Synthomer in mid-2022.
"The board remains focused on maximising shareholder value and it is anticipated that both reviews are likely to conclude in Q2 2022 at the earliest," the company said.