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(Alliance News) - 'Freedom day' in England on Monday brought no joy to the London Stock Exchange's cohort of travel, leisure and hospitality firms as surging coronavirus case numbers spooked investors.
"In markets, freedom day is 'angst day' as Covid cases rise globally," remarked Kit Juckes, a strategist at Societe Generale.
The FTSE 100 index dived 141.91 points, or 2.0%, to 6,866.18 at midday on Monday. The blue-chip index was trading at its lowest levels for two months.
The mid-cap FTSE 250 index tumbled 403.58 points, or 1.8%, to 22,063.42. The AIM All-Share index fell 1.5% to 1,203.30.
The Cboe UK 100 index was down 2.0% at 683.71. The Cboe 250 was down 2.0% at 19,751.06, and the Cboe Small Companies down 1.4% at 14,865.35.
In mainland Europe, the CAC 40 in Paris was down 2.1%, while the DAX 30 in Frankfurt was 2.0% lower in the early afternoon.
"There is no ticker tape parade, cheers from the rooftops or people dancing in the streets as freedom day finally comes," says Russ Mould, investment director at AJ Bell. "The UK stock market is certainly not in a celebrating mood."
Sterling was subdued as well. The pound was quoted at USD1.3717 on Monday, slipping from USD1.3788 at the London equities close on Friday.
Mould noted share price dips for cinema chain Cineworld, down 4.4% at midday, and for Wagamama pan-Asian restaurant chain owner Restaurant Group, which was 6.4% lower.
"Many of the stocks leading the UK stock market downwards are related to travel and leisure, suggesting that investors are extremely worried that we've lifted restrictions too soon and that another lockdown could be a month or two round the corner," said Mould.
Also troubling travel stocks was a last-minute announcement decision by the UK government to impose quarantine rules on fully vaccinated people travelling from France, despite the requirement being removed for amber list countries from Monday.
Britons in France have spoken of their "frustration" after discovering they will still need to quarantine for 10 days and take two tests after returning to England, even as the self-isolation and day eight test requirement is being lifted on arrivals from all other amber list countries if someone is double-jabbed or under 18.
Shares in budget airlines easyJet and Ryanair were down 5.2% and 3.3% respectively at midday.
Despite the the end of social distancing and venue capacity constraints in England, pub shares also were in the red as self-isolation rules cripple the industry. JD Wetherspoon was down 1.4% and Marston's down 3.9%, while Young & Co's Brewery fell 4.1%.
Latest figures showed more than 500,000 people in England and Wales were notified by the NHS app to self-isolate in the week up to July 1.
Greene King has been forced to shut 33 pubs in the past week while retail and leisure bosses also have faced closures after staff were told to isolate by the NHS Covid app. Young's also reported last week that around 350 of its staff were isolating due to Covid tracing rules.
A splash of green in the FTSE 250 came from Biffa, shares rising 3.4% on a strong start to its new financial year, with first quarter trading "well ahead" of the waste management firm's own expectations.
The High Wycombe, England-based company said revenue in the three months to end June was 10% higher than in 2019, before the pandemic struck. Biffa said the good performance was due to a faster-than-expected recovery in the UK and strong recycled commodity prices, which are at the highest levels since 2018, according to the company.
Looking at the rest of the year, Biffa said its outlook is connected to the strength of the UK economy. If the economic recovery continues on its current trajectory, the company expects full-year adjusted earnings before interest and tax to be 10% higher than the current market consensus, which is at GBP87.6 million.
Elsewhere in London, Sumo Group surged 41% to 505.24p after agreeing to a takeover offer by Chinese technology giant Tencent Holdings at an equity valuation of GBP919 million.
Existing shareholder Tencent offered 513p per share in cash for the Sheffield-based provider of creative and development services to the video game industry, a 43% premium to Sumo's closing price on Friday of 358.00p.
Tencent already owns 8.8% of Sumo and, including these shares, has support for its offer representing 33% of Sumo's equity. It has been a shareholder since 2019.
"The deal surpasses our fair value of 420p, and highlights, to us, the continued attraction of the video games industry," said analysts at broker Shore Capital.
Looking to New York, stocks are set to follow Europe into the red. The Dow Jones is pointed down 1.1%, the S&P 500 down 0.8%, and the Nasdaq Composite down 0.4%.
US earnings season continues to roll on following bank results last week. Due are second-quarter results from IBM after the New York market close on Monday. The week heats up as it progresses, with Netflix on Tuesday the first of the FAANGs to report on the second quarter of 2021.
The dollar was on the front foot amid Monday's risk-off mood.
The euro traded at USD1.1774 on Monday, down against USD1.1810 late Friday. Gold also faltered against the strong dollar, quoted at USD1,802.83 an ounce midday Monday, down from USD1,813.55 on Friday.
However, against the safe-haven Japanese yen, the dollar fell to JPY109.75 from JPY110.15 late Friday in London.
Brent oil was trading at USD71.59 a barrel, down on USD73.27 late Friday. The world's leading oil producers agreed on Sunday to continue to modestly boost output from August reaching a compromise after the United Arab Emirates blocked a deal earlier this month.
In a rare challenge to OPEC leader Saudi Arabia, the UAE had rejected a proposed deal earlier this month as "unjust", leading to a stalemate. But in a compromise, Sunday's discussions agreed to adjust output quotas next May for the UAE, Iraq, Kuwait, Russia and Saudi Arabia itself, meaning their actual cuts will be less.
London-listed oil majors tracked the price of North Sea benchmark Brent lower. BP shares were down 3.4% at midday while Royal Dutch Shell 'A' and 'B' stock fell 2.6% and 2.4% respectively.
By Lucy Heming; lucyheming@alliancenews.com
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