(Alliance News) - London prices were mostly lower at midday on Monday with coronavirus cases in the UK at worryingly high levels, while US equity markets were called lower amid near-term political uncertainty.
Senior government ministers in the UK have discussed the prospect of introducing tighter lockdown controls in an effort to improve compliance with the current rules, according to media reports.
The Daily Telegraph reported that the UK government was considering scrapping the exemption allowing people to exercise with one other person from outside of their household or support bubble.
The Cabinet Office, asked to confirm what tighter restrictions were discussed at the meeting, pointed to words by UK Health Secretary Matt Hancock about the public needing to follow the stay-at-home guidance first and foremost.
Hancock, asked about the prospect of sterner measures, told BBC One's Andrew Marr Show: "I don't want to speculate because the most important message is not whether the government will further strengthen the rules.
"The most important thing is that people stay at home and follow the rules that we have got."
The UK reported another 54,940 coronavirus cases and 563 deaths on Sunday. The latest figures takes the total number of fatalities within 28 days of a positive Covid-19 test to over 81,000.
The FTSE 100 index was down 33.35 points, or 0.5%, at 6,839.91. The mid-cap FTSE 250 index was down 86.09 points, or 0.5%, at 20,978.15. The AIM All-Share index was up 0.2% at 1,181.71.
The Cboe UK 100 index was down 0.4% at 680.85. The Cboe 250 was down 0.8% at 18,196.11, and the Cboe Small Companies was flat 12,186.56.
In Paris, the CAC 40 was down 0.5%, while Frankfurt's DAX 30 was 0.6% lower.
"After the euphoria of last week's market movements, investors are now facing the realisation that Covid cases in the UK remain at elevated levels, while cases are also rising in places like Germany and China. The pace of the vaccine roll-out remains closely watched and any positive news on this front could put a spark back into equity markets," said AJ Bell's Russ Mould.
In the FTSE 100, JD Sports Fashion was the best performer, up 4.4% after the sportswear retailer raised its annual profit guidance as it said demand remained robust, despite Covid-19 restrictions.
The retailer said total revenue for the twenty two week period to January 2, was more than 5% ahead of the prior year as consumers switched between physical stores and online channels.
JD Sports said for the year ending January 30, pretax profit is expected to be significantly ahead of the current market expectations, which average approximately GBP295 million. It is now anticipated that profit for the full year will be at least GBP400 million, it said. The company posted pretax profit of GBP348.5 million in financial 2020.
At the other end of the large-cap index, British Land was down 2.0%. The property company said it collected less than half of its retail rents in its latest quarter, with high streets and shopping centres in the UK hit by Covid-19 restrictions and a national lockdown in England.
For rent due between December 25 and January 7, the property developer collected 71% of its total rent, with an extra 5% being paid monthly and 24% outstanding. By segment, British Land pocketed 95% of office rent but just 46% of retail rent. The December quarter was the third of the company's financial year.
In the FTSE 250, Signature Aviation was the best performer, up 8.7% at 447.10 pence. The aviation services company agreed to a USD4.63 billion takeover, suitor Global Infrastructure Partners said on Monday, fighting off interest from US-based private equity firm Blackstone, which had secured the backing of Bill Gates.
Global Infrastructure said it will pay USD5.50 for each Signature Aviation share, a 51% premium to the aviation services company's 268 pence share price on December 16, the day before talks between the two parties were first announced. Signature Aviation's directors said the offer from GIP IV Hancock Bidco, controlled by GIP, is "fair and reasonable" and have backed the takeover bid.
The agreement ends a bidding war for Signature Aviation, which back in December said it told Blackstone it "would currently be minded to recommend" a firm takeover bid by the private equity firm. GIP co-owns London's Gatwick Airport with France's Vinci.
The dollar was strengthening across the board on Monday amid the risk-off mood in equity markets.
The pound was quoted at USD1.3487 Monday at midday, down from USD1.3585 at the London equities close Friday.
The euro was priced at USD1.2165, down sharply from USD1.2250. Against the yen, the greenback was trading at JPY104.15, up from JPY103.86.
Analysts at ActivTrades explained: "The dollar is gaining ground to other major currencies during Monday trading, as the risk-on sentiment that has dominated the markets recently appears to be receding. To a large extent, the greenback's losses over the last few months are a reflection of investors' faith in the continuation of the Federal Reserve's dovish monetary policies for the foreseeable future.
"However, as the markets digest the recent political developments in Washington, with the Democrats now controlling the presidency, Senate and Congress, the probability of extensive fiscal stimulus being deployed has grown, which in turn increases the likelihood of a change in stance from the Federal Reserve and an anticipated end to the very low interest rates."
Brent oil was trading at USD55.24 a barrel Monday at midday, down from USD55.50 late Friday. Gold was quoted at USD1,845.27 an ounce, lower than USD1,856.00.
Wall Street looks set to slip back from record levels as investors weigh the possibility of higher fiscal stimulus against near-term political uncertainty.
The Dow Jones Industrial Average was called down 0.6%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.3%. All three major averages set fresh record closes on Friday.
US Democrats said Sunday they would push to remove President Donald Trump from office during the final days of his administration after his supporters' violent attack on the Capitol, with some Republicans supporting the move.
Trump could face a historic second impeachment before the January 20 inauguration of Democrat Joe Biden, at a time when the US is hit by a surging pandemic, a flagging economy and searing division.
House of Representatives Speaker Nancy Pelosi, the top Democrat in Congress, said there would be a resolution on Monday calling for the cabinet to remove Trump as unfit for office under the Constitution's 25th amendment.
If Vice President Mike Pence does not agree to invoke the amendment, "we will proceed with bringing impeachment legislation" in the House, Pelosi said.
"Investors are torn between the prospect of large stimulus given the Dems control of both legislative branches of government and the near term political turmoil that surrounds Washington DC...If equities hold firm however, the would be a very bullish sign that markets are looking past the circus-like atmosphere in DC, but at this point they are vulnerable to a pull back especially if Donald Trump attempt any further illegal manoeuvrers to stay in office," said analysts at BK Asset Management.
Social media platforms are likely to face selling pressure in New York on Monday following Twitter's decision to permanently suspended the account of Trump, leading to fears of more stringent regulatory scrutiny. Shares in Twitter and Facebook were down 6.8% and 1.6% respectively in pre-market trade.
"Twitter saw losses on Friday after it suspended President Trump from its platform, in a move designed perhaps to head off potential future regulatory moves against it. However this could well be a case of too little too late, with its shares down sharply in the premarket already. The same is likely to apply to Facebook which has come under significant amounts of criticism for also not banning the president sooner," said CMC Markets analyst Michael Hewson.
"These moves, whether you consider them justified or not, could well see them lose further users if they become seen as arbiters of what is considered politically correct or acceptable. Whichever way you look at it the honeymoon could well be over this particular part of the market as a Biden administration gets its feet under the table over the next four years," Hewson added.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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