LONDON MARKET CLOSE: Stocks Fret Over Possible Tighter UK Restrictions

(Alliance News) - Equities in London started the week on a sour note, with worries over potentially tighter lockdown rules in the UK hitting domestically-exposed stocks.

The FTSE 100 index closed down 74.78 points, or 1.1%, at 6,798.48. The FTSE 250 ended down 288.11 points, or 1.4%, at 20,776.13, and the AIM All-Share closed down 1.00 point, or 0.1%, at 1,178.76.

The Cboe UK 100 ended down 0.9% at 677.09, the Cboe UK 250 closed down 1.7% at 18,035.02, and the Cboe Small Companies ended down 0.4% at 12,129.61.

"The threat of increased economic restrictions over the coming months has dealt a blow to market sentiment today," said Joshua Mahony, senior market analyst at IG.

UK Prime Minister Boris Johnson has warned that tougher lockdown measures may be needed as he announced that around 2.4 million vaccines for Covid-19 have now been administered.

The prime minister stressed "now is the moment for maximum vigilance" amid increasing calls for tougher lockdown restrictions as case rates soar in several parts of the country. Among those calling for tougher lockdown rules is Labour leader Keir Starmer, who told reporters the country is "at the most serious stage" of the pandemic "and that calls for the most serious restrictions".

It comes as Chris Whitty, England's chief medical officer, warned the UK has not yet hit the peak of the current wave of Covid-19 infections, with the next few weeks being "the worst" of the pandemic for the NHS.

Further, Rishi Sunak has warned the UK economy will "get worse before it gets better" given the latest lockdown. The Chancellor also cautioned the "road ahead will be tough" for the UK in its recovery from the Covid-19 pandemic, as he updated MPs in the House of Commons.

IG's Mahony commented: "Despite an intensifying vaccination programme that has seen the UK vaccinate over 2.4 million individuals, the fear of an extended lockdown is hurting UK-focused stocks. Chris Whitty states that the UK will need to remain restricted until Spring, yet speculation of a further tightening in rules serves to highlight the difficulty in controlling this current Covid strain."

In the domestically-exposed FTSE 250 index, tour operator Tui ended down 7.7%, cinema operator Cineworld fell 6.3% and train and coach ticketing platform Trainline slipped 6.5%.

The virus situation was also dire elsewhere in Europe. Virus deaths in Germany crossed 40,000 on Sunday, with Chancellor Angela Merkel warning that the country had yet to feel the full impact of socialising over Christmas and New Year period.

In European equities on Monday, the CAC 40 in Paris ended down 0.8%, while the DAX 30 in Frankfurt ended down 0.8%.

The pound was quoted at USD1.3506 at the London equities close Monday, soft compared to USD1.3585 at the close on Friday. The euro stood at USD1.2163 at the European equities close Monday, down against USD1.2250 at the same time on Friday.

Against the yen, the dollar rose to JPY104.21 compared to JPY103.86 late Friday.

Stocks in New York were in the red at the London equities close, with the Dow Jones down 0.3%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 0.7%.

Top US Democrats were seeking Monday to fast-track Donald Trump's removal in the final days of his presidency, with a historic second impeachment looming this week if he refuses to resign over his supporters' violent assault on the Capitol.

The ultimatum – which threatens to torpedo the single-term president's future political ambitions – will make for a frenetic culmination of four years of controversy ahead of Joe Biden's January 20 inauguration.

House of Representatives Speaker Nancy Pelosi, the top Democrat in Congress, said there would be a resolution calling for the cabinet to remove Trump – who has been absent from the public spotlight for days – 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 Sunday.

Trump has been largely silent in recent days – making few statements and holding no news conferences. Twitter, his favoured public platform, has banned him for language that could incite violence. Twitter shares were down 5.8% in New York on Monday.

In London, JD Sports ended as the top blue-chip performer - adding 3.8% - after raising its annual profit guidance following a "robust" festive period.

The FTSE 100 sportswear retailer, hit by store closures due to Covid-19 restrictions, said it expects full-year headline pretax profit of at least GBP400 million, up from the previous forecast of GBP295 million.

This would be down 8.8% from its pretax profit before exceptional items of GBP438.8 million in the financial year that ended February 1, 2020. It would however be a 15% climb from its statutory pretax profit of GBP348.5 million.

Towards the other end of the FTSE 100 index was Smith & Nephew, ending down 2.6% as it braced for fourth-quarter and full-year sales to be hurt by Covid-19 restrictions.

The medical devices manufacturer stated it expects to post a fourth-quarter underlying revenue decline of around 7.0%. It said sales were hurt by increased rates of Covid-19 infection from mid-October onwards, particularly in the US and Europe, as surgical procedures unconnected to the pandemic were postponed following the reintroduction of restrictions.

Smith & Nephew added that annual underlying revenue is expected to have declined by around 12%. The company reiterated trading profit margin will be substantially lower year-on-year, with negative operating leverage due to lower volumes partially offset by cost control measures.

Mid-cap Signature Aviation rallied 7.3% to 435.50 pence as it agreed to a USD4.63 billion takeover by Global Infrastructure Partners.

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 LP, controlled by GIP, is "fair and reasonable" and have backed the takeover bid.

On AIM, Abcam advanced 6.1%. The supplier of life science research tools said it expects to return to growth in the first half of its financial year as all regions except for the Americas grew in the high single to double-digits.

Abcam expects revenue for the first half ended December 31 of GBP147.5 million, up 6.7% from GBP138.2 million a year prior. In-house products represented over 55% of total revenue and grew by over 25%, the company said.

Chief Executive Alan Hirzal said: "It is great to see the business return to growth in a market environment where demand is well below normal levels. This performance gives us confidence in the long term opportunity at Abcam."

Brent oil was quoted at USD55.58 a barrel at the London equities close Monday, firm on USD55.50 late Friday. Gold dipped to USD1,845.86 an ounce at the London equities close Monday against USD1,856.00 at the close on Friday.

The UK corporate calendar on Tuesday has half-year results from Games Workshop and trading statements from housebuilder Vistry Group, Hut Group owner THG and sofa retailer DFS Furniture.

In Tuesday's economic calendar, there are like-for-like retail sales from the British Retail Consortium out at 0001 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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