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(Alliance News) -Â London stocks kicked off the new week on a downbeat note as China reported a handful of new virus clusters, knocking trade in Asia overnight, while UK travel restrictions on Spain sent airline shares lower.
A sell-off of travel stocks such as British Airways-owner International Consolidated Airlines on Monday was offsetting gains for gold miners as the precious metal surged past 2011 highs to hit new record levels.
The FTSE 100 index was down 28.25 points, or 0.5%, at 6,095.57 early Monday. The mid-cap FTSE 250 index was down 80.87 points, or again 0.5%, at 17,183.97. The AIM All-Share index was up 0.2%, however, at 885.36.
The Cboe UK 100 index was down 0.4% at 607.73. The Cboe 250 was down 0.6% at 14,603.92 and the Cboe Small Companies down 0.2% at 9,133.51.
In mainland Europe, the CAC 40 in Paris was down 0.3%, but the DAX 30 in Frankfurt was up 0.3% early Monday.
The mostly lower start in Europe comes after China recorded 61 new coronavirus cases on Monday – the highest daily figure since April – propelled by clusters in three separate regions that have sparked fears of a fresh wave.
The bulk of 57 new domestic cases were found in the far northwestern Xinjiang region, according to the National Health Commission, where a sudden outbreak in the regional capital of Urumqi occurred in mid-July.
Fourteen domestic cases were also recorded in the northeastern province of Liaoning where a fresh cluster broke out in the city of Dalian last week. Two more local cases were found in the neighbouring province of Jilin near the North Korean border – the first since late May. The last four infections confirmed on Monday were imported from overseas.
It is the highest daily tally of new virus cases since April 14, when 89 cases, mostly imported, were recorded.
"Asian equities are mixed this morning as signs of a second-wave of Covid-19 cases broadly offsets growing evidence of a rebound in economic activity. The former is providing an overall cap on sentiment," said Lloyds Bank.
The Japanese Nikkei 225 index closed down 0.2%. In China, the Shanghai Composite ended up 0.3%, while the Hang Seng index in Hong Kong is down 0.3% in late trade.
Brent oil was trading at USD43.02 a barrel early Monday, soft on USD43.06 late Friday.
The dollar was sharply lower across the board early Monday. Sterling was quoted at USD1.2818 early Monday, higher than USD1.2786 at the London equities close on Friday.
The euro traded at USD1.1707 early Monday, higher than USD1.1635 late Friday. Against the yen, the dollar was quoted at JPY105.50, down versus JPY105.85.
The greenback's fall also helped to boost gold prices to record levels.
Gold was quoted at USD1,934.57 an ounce early Monday, higher than USD1,900.17 on Friday. The precious metal hit a record high of USD1,944.36 an ounce overnight.
"Low US yields remain supportive of a further attempt on the USD2,000 mark," commented Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Gold miners surged to the top of the FTSE 100 as a result, with Polymetal International up 5.4% in early trade and Fresnillo up 4.1%.
At the bottom of the FTSE 100 index was International Consolidated Airlines, down 8.2%.
Knocking London travel stocks at the start of the week was the UK's sudden decision to reimpose strict quarantine rules at short notice on travellers returning from Spain.
Ministers announced on Saturday that holidaymakers who had not returned from Spain and its islands by midnight would be forced to quarantine for 14 days after Covid-19 second wave fears saw the popular holiday destination struck off the UK's safe list.
The Foreign Office guidance advising against all but essential travel to mainland Spain does not include the islands, but ministers opted to apply blanket quarantine arrangements across the Spanish territories.
The quick turnaround even caught out UK Transport Secretary Grant Shapps, who is currently in Spain for his summer break and will join thousands of others in being forced to self-isolate for a fortnight on his return to Britain.
In the FTSE 250, travel firm TUI was down 14% and low-cost airline easyJet down 12%.
Ryanair shares were down 8.5%. The budget airline swung to a loss of GBP185 million in the first quarter ended June 30 from a net profit of GBP243 million a year ago.
The company saw 99% of its fleet grounded from mid-March to the end of June due to travel restrictions caused by Covid-19. Passengers fell to 500,000 in the quarter from 41.9 million a year ago.
"The past quarter was the most challenging in Ryanair's 35 year history. Covid-19 grounded the group's fleet for almost 4 months as EU governments imposed flight or travel bans and widespread population lockdowns," Ryanair said.
Ascential shares fell 3.4% after the data and analytics company posted an interim loss.
Revenue slumped to GBP144.3 million in the first half from GBP236.2 million, down 39%. Marketing segment revenue slumped 74%, primarily due to the cancellation of the 2020 edition of Cannes Lions.
Ascential swung to a pretax loss of GBP78.3 million from a GBP30.5 million profit a year ago.
Looking ahead, the FTSE 250 firm said: "Clearly, the impact on our business in 2020 from Covid-19 has been significant. While we do not expect an immediate recovery in underlying trading conditions it is also apparent that a number of our brands remain well positioned, arguably more so than six months ago, to benefit from the accelerated shift towards eCommerce that we have witnessed, particularly clearly, in the past period."
The economic calendar on Monday is fairly light, with the Ifo German business climate index at 0900 BST and US durable goods orders at 1330 BST.
The focus of the week ahead will be the US Federal Reserve's interest rate decision on Wednesday, while second-quarter GDP readings on Thursday from Germany and the US also will be of interest, followed by the same from the eurozone on Friday.
By Lucy Heming;Â lucyheming@alliancenews.com
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