LONDON MARKET CLOSE: Dark mood on Black Friday as variant fears bite

(Alliance News) - The FTSE 100 on Friday had its worst session in over a year, with fears over a new coronavirus variant slamming oil prices, the travel sector and banking stocks.

Wall Street reopened from Thursday's Thanksgiving holiday to a sea of red. At least the pain will be cut short in New York, with markets closing early the day after Thanksgiving, at 1800 GMT.

The FTSE 100 index dropped 266.34 points, or 3.6%, to 7,044.03. This means the index has lost 2.5% since the start of the week.

The FTSE 250 tumbled 742.07 points, or 3.2%, to 22,537.89, posting a week-to-date loss of 4.1%, and the AIM All-Share closed down 22.34 points, or 1.8%, at 1,181.62, down 4.1% since the week began.

The Cboe UK 100 ended down 3.7% at 698.28, the Cboe UK 250 closed down 3.3% at 20,065.77, and the Cboe Small Companies ended down 3.4% at 14,722.45.

In European equities on Friday, the CAC 40 in Paris ended down 4.8%, while the DAX 40 in Frankfurt ended down 4.2%. The European bourses had an even harder week than London, the CAC tumbling 5.2% since the week began and the DAX down 5.6%.

News of a new coronavirus variant detected in South Africa, and fears it could evade vaccine protection, battered markets on Friday.

South African scientists announced on Thursday they had detected a new Covid-19 variant, called B.1.1.529, which is blamed for a surge in infection numbers recently.

So far, under 100 sequences have been reported. "Early analysis shows that this variant has a large number of mutations that require and will undergo further study," the World Health Organisation told Alliance News on Friday in response to questions around the new strain.

Europe reacted with panic, with EU chief Ursula von der Leyen proposing the bloc stop all flights to and from southern Africa and the UK imposed a ban on flights from six African nations, including South Africa.

But in a worrying sign, Belgium said it has detected the first announced case in Europe of the new Covid-19 variant, in an unvaccinated person returning from abroad.

"Fear of the unknown will weigh heavily going into the weekend and could carry over into next week. We're seeing a typical flight to safety in the markets with equities, commodity currencies and oil getting whacked and traditional safe havens like bonds, gold, the yen and swissy getting plenty of love," said Craig Erlam, senior market analyst at Oanda.

Against the yen, the dollar dropped to JPY113.24 at the London equities close Friday from JPY115.34 late Thursday, and gold surged to USD1,799.30 an ounce against USD1,789.81.

Oil prices crashed on fears that the new variant will lead to fresh virus restrictions across the globe, hammering demand for fuel. Brent oil dived to its worst levels in two months, trading at USD73.54 a barrel at the London equities close Friday from USD81.92 late Thursday.

This had a knock-on effect to London's oil majors, with shares in BP dropping 7.9% and Royal Dutch Shell 'A' and 'B' shares falling 5.7% and 5.6% respectively.

Another group sharply in the red was the travel sector. Shares in British Airways parent International Consolidated Airlines plummeted 15% and Rolls-Royce Holdings, which makes plane engines, fell 12%, while Premier Inn hotel chain owner Whitbread fell 8.7%.

In the FTSE 250, budget airline easyJet fell 11% and cruise operator Carnival fell 16%. SSP, which operates food and beverage outlets in travel locations such as airports and train stations, fell 16%.

"Banks are also suffering heavy losses today, with traders weighing up the implications for monetary policy. Expectations around a December rate hike from the Bank of England have largely gone out the window for now, with little chance we are going to see the MPC tighten policy if this strain does result in another bout of lockdowns," added Joshua Mahony, senior market analyst at IG.

Standard Chartered shares closed down 8.9%, NatWest fell 7.5%, Lloyds Banking fell 7.4%, Barclays fell 7.1% and HSBC fell 6.7%.

The pound was flat despite worries over the outlook for UK interest rates, as the dollar took a hit from uncertainty over the US Federal Reserve's taper plans. Sterling was quoted at USD1.3322 at the London equities close Friday, little changed from USD1.3321 at the close on Thursday.

The euro stood at USD1.1315 at the European equities close Friday, up against USD1.1211 at the same time on Thursday.

Wall Street returned from Thursday's Thanksgiving holiday to a blood bath, with the Dow Jones down 2.9%, the S&P 500 down 2.3% and the Nasdaq Composite down 2.2%.

Back in London, Ocado was one of a handful of stocks posting gains on Friday. The online grocer, a lockdown winner, closed up 4.6%. Ocado saw a surge in orders during the UK's first lockdown, and investors could be hoping the company will see a similar boost if restrictions are imposed again.

Not even the prospect of a bumper Black Friday shopping event was able to lift the rest of the retail sector, with the FTSE 350 retailers index ending down 2.2%.

Figures from Barclaycard – showing credit card spending from midnight to 1pm – has revealed that sales volumes have increased by 4.2% compared with Black Friday in 2019. This also represented a 23% increase on volumes against 2020, Barclaycard said.

Rob Cameron, chief executive officer of Barclaycard Payments, said: "It's clear that there is still appetite for the savings that are to be had, and consumers are making the most of shops being open to pick up a festive bargain."

But fears over another lockdown, especially one implemented in the run-up to the key Christmas trading period, dominated. Shares in clothing & homewares retailer Next ended down 3.2% and peer Marks & Spencer shed 3.1%.

It was a similar story for pub and restaurant operators. JD Wetherspoon fell 3.8%, Restaurant Group tumbled 8.7% and Marston's dropped 8.1%. Cinema operator Cineworld slumped 8.0%.

Looking to next week, Monday's UK corporate calendar has interim results from guarantor loans provider Amigo. Later in the week come full-year results from easyJet, London West End landlord Shaftesbury and investment platform AJ Bell.

Monday's economic calendar has eurozone consumer confidence at 1000 GMT and German inflation at 1330 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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