The London stock market tumbled 1.8% in early trading in a sharp sell-off by investors reacting to the new lockdown restrictions, a new strain of coronavirus and stalled Brexit talks.
The FTSE 100, London’s blue-chip index, fell by 117 points to 6,410 points on opening on Monday. The heavy losses come as Brexit talks remain in limbo, France implements a ban on accompanied freight for 48 hours, and a new strain of coronavirus emerges in the UK.
The new strain – thought for now to be up to 70% more transmissible, but not more deadly – has prompted a wave of countries to ban travel from the UK.
Covid chaos disrupts Kent ports as France bans UK freight
The pound was also hit, falling 1.8% against the US dollar, to $1.32, and by 1% against the euro, at €1.09.
International Airlines Group, the owner of British Airways, was the biggest faller on the FTSE 100, down by 16%, followed by jet engine manufacturer Rolls-Royce, which fell 9%. Travel group Tui dropped 7% and Carnival, the cruise ship company, fell 9%.
Banks, which are heavily exposed to the UK economy, were also hit. Shares in Lloyds Banking Group, the largest high street lender, fell 6% and Barclays was down 5%.
Losses were seen throughout Europe – in Germany, the Dax lost 1.9%, France’s Cac 40 fell 2.4% and Spain’s Ibex lost 2.8%. Shares in aircraft maker Airbus were off almost 5% and there were losses for Accor Hotels and the French airports company ADP.
“The new coronavirus strain is weighing heavily on sentiment as the UK’s isolation from Europe becomes increasingly physical as well as conceptual,” said Richard Hunter, head of markets at Interactive Investor. “Against this backdrop, investors are far less likely to commit fresh capital to the market, especially in the last few trading days of the year.”
Grant Shapps, the UK transport secretary, has insisted that the UK will not ask to extend the Brexit transition period beyond 1 January, despite chaos at UK ports and the new phase in the coronavirus crisis.
However, he said that there will be “significant disruption” at Dover and that supermarket supply chains are pretty robust. Shapps added that short-term disruption is not a specific problem; the issue is how long it persists.
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