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(Alliance News) - A bright start to trading on Friday gave way to risk-off moves in both equities and foreign exchange as the morning progressed, a lockdown in Austria prompting worry that further restrictions across the rest of Europe will soon follow.
"With Austrian cases surging over 400% in the last month alone, they do stand out as a particularly bad case when set against many of their European peers. However, with Covid cases turning upwards across the likes of Germany, France, and Portugal, there is a fear that today's announcement is indicative of where other European nations could find themselves in two to three weeks' time," said Joshua Mahony, senior market analyst at IG.
In London, the FTSE 100 was down 42.07 points, or 0.6%, at 7,213.89 midday Friday. At this level, the bellwether stock index is on course for a week-to-date decline of 1.8%.
The mid-cap FTSE 250 index was down 116.37 points, or 0.5%, at 23,458.25. The AIM All-Share index was down 3.27 points, or 0.3%, at 1,233.48.
The Cboe UK 100 index was down 0.6% at 714.83. The Cboe 250 was down 0.5% at 20,896.21, and the Cboe Small Companies down 0.6% at 15,387.00.
In mainland Europe, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.1% in early afternoon trade Friday.
The euro tumbled to USD1.1294 from USD1.1351 late Thursday as Austria announced it will impose a lockdown for all and make vaccinations mandatory, becoming the first EU country to take such stringent measures as coronavirus cases spiral.
The lockdown will start on Monday, while vaccination against Covid-19 in the Alpine nation will become mandatory from February 1 next year, Chancellor Alexander Schallenberg said. The confinement will initially last 20 days with an evaluation after 10 days, he said.
The lockdown means people are no longer allowed to leave their houses with few exceptions such going to work, shopping for essentials and exercising.
Further worrying investors, the head of Germany's disease control agency on Friday cast doubt on whether new government restrictions to fight coronavirus would be enough to break a vicious fourth wave of the pandemic.
The director of the Robert Koch Institute, Lothar Wieler, told reporters that with record-breaking infection levels, the nationwide curbs on the unvaccinated were insufficient. Health Minister Jens Spahn told the same news conference that the government was stepping up supplies of vaccines, with five million jabs ordered for doctor's offices next week to meet demand for booster doses.
Asked whether Germany would consider a hard lockdown as announced in Austria, Spahn said it was not on the table yet "but we shouldn't rule anything out".
As the mood turned risk-off, the safe haven yen advanced. Against the yen, the dollar fell to JPY113.98 versus JPY114.28.
Though struggling against the yen, dollar was otherwise buoyant as traders migrated toward the world's reserve currency. Sterling was quoted at USD1.3431 midday Friday, lower than than USD1.3475 at the London equities close on Thursday.
Brent oil slipped to USD79.26 a barrel from USD80.30 late Thursday on worries that more lockdowns in Europe will hit energy demand.
Gold was quoted at USD1,858.93 an ounce on Friday, lower than USD1,861.03 on Thursday.
Wall Street futures were painted red over lockdown worries. The Dow Jones was called down 0.4% and the S&P 500 down 0.1%, though the tech-heavy Nasdaq Composite - comprised of stocks such as online retailer Amazon.com, video games maker Electronic Arts and home equipment firm Peloton - was called up 0.4% as investors rushed back to lockdown-beneficiary tech stocks.
In London, it was online grocer Ocado at the top of the FTSE 100, shares up 7.7%. This was after a Deutsche Bank note over Marks & Spencer's prospects, which raised the possibility of buying out Ocado's half of their online retail joint venture.
Of M&S, Deutsche Bank said: "Cash flow is no longer being squandered on an unsustainable dividend but saved to recover the investment grade credit rating that may be required to buy out Ocado."
M&S shares were down 0.2%.
At the bottom of the FTSE 100 was British Airways parent International Consolidated Airlines, falling 4.6% on worries over further lockdowns in Europe just as air travel is starting to recover towards pre-virus levels.
easyJet in the FTSE 250 fell 4.6% and Ryanair - which on Friday revealed plans to delist from the London Stock Exchange - fell 3.1%.
Outside of travel, DIY retailer Kingfisher slumped 4.1% after saying sales remain above pre-pandemic levels, despite a boost in demand home improvement products waning.
Total sales in the third quarter ended October 31 were GBP3.25 billion, down 6.3% on a year ago. The like-for-like decline was 2.4% on an annual basis at constant currency, but on two years earlier - so in comparison with pre-virus levels - growth was 15%.
Kingfisher's full-year adjusted pretax profit guidance range is GBP910 million to GBP950 million. It expects adjusted pretax profit at the top end of this range.
Kingfisher's update came as data showed UK retail sales for October were stronger than expected, which should give the sector some reasons to be cheerful heading into the key festive trading period.
Retail sales rose 0.8% month-on-month in October, accelerating from a flat reading for September and beating expectations, according to FXStreet, for a 0.5% rise.
Sales volumes were 5.8% higher than pre-pandemic levels.
"Clothing stores sales volumes in October 2021 were only 0.5% below pre-pandemic levels in February 2020, with some retailers suggesting that early Christmas trading had boosted sales," the ONS said.
By Lucy Heming; lucyheming@alliancenews.com
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