LONDON MARKET CLOSE: Reopening jitters batter stocks on 'freedom day'

(Alliance News) - Stock prices in Europe tumbled on Monday as fears of rising Covid-19 cases hit travel and leisure stocks and overshadowed 'freedom day' in England, which saw the end of a spate of legal virus restrictions.

The mood in mainland Europe was similarly drab, with declines in insurers - due to recent flooding - adding to the battering that travel stocks have taken. Wall Street also opened lower, joining the global sell-off, ahead of a big week of corporate earnings.

"The FTSE 100 sell off has accelerated as strong undercurrents of Covid uncertainty wash through the financial markets, with travel stocks among the biggest fallers," Hargreaves Lansdown analyst Susannah Streeter commented.

"With some scientists warning that infections could reach 200,000 a day by September, there is now a feeling that the UK could be staring at a fresh Autumn lockdown."

The FTSE 100 index closed down 163.70 points, or 2.3%, at 6,844.39. The FTSE 100 ended at its lowest level since early April.

The mid-cap FTSE 250 index closed down 526.12 points, or 2.3%, at 21,940.88. The AIM All-Share index closed 22.32 points lower, or 1.8%, at 1,199.17.

The Cboe UK 100 index closed down 2.4% at 680.83. The Cboe 250 dropped 2.5% to 19,637.41, and the Cboe Small Companies shed 2.3% at 14,733.50.

In Paris, the CAC 40 dropped 2.5%, while the DAX 30 in Frankfurt ended down 2.6%.

Travel stocks were among the worst-performing European equities. In London, British Airways owner International Consolidated Airlines Group shed 5.2%, budget carrier easyJet dropped 6.6% and cruise ship operator Carnival plunged 8.3%.

In Paris, Airbus fell 6.4%, while Frankfurt-listed jet engine maker MTU Aero Engines dropped 6.0%.

Hargeaves Lansdown's Streeter added: "The confusion surrounding quarantine and testing rules for international travel is also leading to fresh jitters about recovery for the aviation and tourism industries.

"Optimism which had been on the horizon just a few weeks ago has again been obscured by dark clouds, especially with the snap decision to enforce a ten-day quarantine for arrivals from France. With the rules for teenagers also unclear, many families, once hopeful for a holiday, are now putting away their suitcases, settling for a summer of staycations and day trips."

UK Prime Minister Boris Johnson has appealed to people to exercise their new freedoms with caution as most mandatory lockdown restrictions in England are finally lifted.

Social-distancing rules which, in one form or another, have governed people's lives for over a year finally ended on Monday morning at one minute past midnight.

Face masks are no longer mandatory in shops and on public transport, limits on gathering have gone and the work from home guidance has ended.

Nightclubs, theatres and restaurants can fully reopen, while pubs are no longer restricted to table service only.

Johnson is spending so-called 'freedom day' self-isolating at his official country residence at Chequers after being 'pinged' by NHS Test & Trace following a contact with Health Secretary Sajid Javid, who subsequently tested positive for the virus.

Despite the reopening, pub firm Greene King has been forced to shut 33 pubs in the past week, while retail and leisure bosses have also faced closures after staff were told to isolate by the NHS Covid app.

Nick Mackenzie, chief executive of Greene King, said he believes current self-isolation rules need reformed after he was forced to shut some pubs or reduce opening hours.

London-listed pub firms Mitchells & Butlers and Fuller, Smith & Turner shed 4.2% and 4.5%.

Elsewhere in London, Spire Healthcare shares dropped a hefty 7.2% to 218.00 pence after its acquisition by Ramsay Health Care was terminated, having failed to win enough backing from shareholders.

The takeover received 70% support from Spire investors, falling short of the 75% minimum threshold required, the company said.

Sydney-based Ramsay had offered 240p per share for Spire in May, before making a final offer of 250p per share - worth GBP1.04 billion. Spire currently has a market capitalisation of GBP874.4 million.

Mediclinic International, which owns 30% of Spire, had backed the deal from the start. Its stock closed 1.8% lower.

A deluge of flooding in mainland Europe weighed on the insurance and reinsurance industry on Monday.

"The European floods are estimated to have cost the reinsurance industry several billions of dollars; we estimate between USD2 billion to USD3 billion," analysts at Berenberg commented.

Allianz shares tumbled 3.8% in Frankfurt, while Munich Re plunged 5.0%. In Zurich, Swiss Re fell 4.5%.

The pound was quoted at USD1.3677 at the London equities close on Monday, down sharply from USD1.3788 on Friday. The pound hit an intraday low of USD1.3664, roughly a three-month low against the US dollar. The euro stood at USD1.1798, down from USD1.1810. Against the yen, the dollar was trading at JPY109.51, down from JPY110.15.

Equities in New York were sharply lower, also hurt by virus fears. The Dow Jones Industrial Average fell 2.3%, the S&P 500 index lost 1.7% and the Nasdaq Composite was 1.1% lower.

"A ramp-up in new Covid cases is bringing fear that we may take a step backward here, weighing on stocks to start the week," TD Ameritrade analyst JJ Kinahan said.

"Airlines, hotels, casinos, and restaurants all could receive the brunt of the blow if Covid worries keep growing."

IBM reports second quarter results after the closing bell in New York 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. Elsewhere, Philip Morris International reports second quarter numbers on Wednesday, Twitter on Thursday and American Express on Friday.

Brent oil was trading at USD69.23 a barrel at the London equity market close on Monday, down sharply from 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.

Gold faltered due to a largely strong dollar, the precious metal was quoted at USD1,807.03 an ounce late Monday, down from USD1,813.55 on Friday.

Tuesday's economic calendar has the latest People's Bank of China interest rate announcement overnight, before producer price index data from Germany at 0700 BST.

The local corporate calendar has first half output results from miner Anglo American and trading updates from carrier easyJet and newly-listed fintech firm Wise.

By Eric Cunha; ericcunha@alliancenews.com

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