LONDON MARKET CLOSE: Travel Stocks Hit As Mutant Strain Fears Mount

(Alliance News) - Stocks in London ended mostly lower on Monday amid fears that a mutation of Covid-19 will hinder the global economic recovery, with travel stocks among those worst hit.

At the end of last week, UK Prime Minister Boris Johnson pointed to evidence that the mutation of Covid-19 first detected last September may be more deadly than the original strain.

Over the weekend, UK Health Secretary Matt Hancock suggested any relaxation of restrictions were a "long, long way" off.

Hancock said that so far there were 77 known cases of the South African variant in the UK and nine of the Brazilian. He said that all the cases of the South African variant were linked to travel.

The FTSE 100 index closed down 56.22 points, or 0.8%, at 6,638.85. The FTSE 250 ended down 246.50 points, or 1.2%, at 20,350.41, and the AIM All-Share closed up 2.45 points, or 0.2%, at 1,197.76.

The Cboe UK 100 ended down 0.9% at 659.40, the Cboe UK 250 closed down 1.6% at 17,683.53, and the Cboe Small Companies ended down 0.2% at 12,226.55.

In Paris the CAC 40 ended 1.6% lower, while the DAX 30 in Frankfurt fell 1.7%.

CMC Markets analyst David Madden said: "Concerns that additional and stricter restrictions will prolong the economic rebound in the wake of the pandemic are weighing on market confidence. It is believed that Britain will tighten rules in relation to people flying into the country. France already has a countrywide curfew in place and there is growing talk a third national lockdown will be introduced.

"The EU's distribution of the coronavirus vaccine has been slow, so that is also playing on dealers' minds as it doesn't seem that restrictions will be lifted anytime soon. The UK's rolling out of the vaccine has been quick when compared with its continental neighbours, hence why the FTSE 100 and the FTSE 250 haven't fallen as much as eurozone indices."

In the FTSE 100, British Airways parent International Consolidated Airlines ended the worst performer, down 7.7% amid travel-related concerns. In the FTSE 250, budget airline easyJet ended down 6.7%, while Irish carrier Ryanair ended down 4.1%.

Aftermarket aviation service providers Rolls-Royce and Melrose Industries closed down 4.8% and 5.6% respectively.

The UK is considering tightening controls at its borders to prevent the import of new strains of Covid-19, which it fears may undermine the success of its vaccination rollout.

The latest government figures showed more than 6.3 million people across the UK have received their first dose of the vaccine - with a record-breaking 491,970 being injected in a single day over the weekend.

They suggest the programme is on course to meet Johnson's target of getting the jab to 15 million of the government's top priority groups - including all over-70s - by mid-February, provided supplies of the vaccine can be maintained.

Senior ministers are due to meet on Tuesday to discuss a proposal to require travellers arriving in the UK to pay to quarantine at a designated hotel to ensure they are following the rules on self-isolating.

On AIM, boohoo closed up 4.7% after the online fashion retailer said it has acquired all of the intellectual property assets of department store Debenhams Retail for GBP55 million in cash. The company will only be acquiring brands and associated intellectual property rights. The deal does not include Debenhams retail stores, stock, or any financial services.

Peer ASOS rose 5.6% after the online clothing retailer confirmed exclusive discussions with Arcadia's administrators over the acquisition of the Topshop, Topman, Miss Selfridge and HIIT brands.

"The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its customer base. However, at this stage, there can be no certainty of a transaction and ASOS will keep shareholders updated as appropriate," the company said.

Arcadia, which employed around 13,000 people and has 444 UK stores, collapsed at the start of December due to the impact of the coronavirus pandemic, years of under-investment, and a failure to keep up with shifts to online shopping.

The pound was quoted at USD1.3655 at the London equities close, lower from USD1.3665 at the close Friday.

The euro stood at USD1.2125 at the European equities close, down from USD1.2175 late Friday. Against the yen, the dollar was trading at JPY103.81, flat from JPY103.80 late Friday.

Stocks in New York were mostly lower at the London equities close ahead of a busy week on the corporate front.

The DJIA was down 0.9% and the S&P 500 index was down 0.1%, but the Nasdaq Composite was up 0.6%.

This week's earnings calendar includes reports from Apple, Microsoft and other tech giants, as well as a Federal Reserve monetary policy announcement. Results are also expected from Tesla, Boeing and Chevron, among other companies.

Markets are also watching the developments in Washington, where centrist lawmakers have responded sceptically to US President Joe Biden's proposed USD1.9 trillion economic relief package.

Brent oil was quoted at USD55.50 a barrel at the equities close, slightly lower from USD55.55 at the close Friday.

Gold was quoted at USD1,848.02 an ounce at the London equities close, down against USD1,853.00 late Friday.

The economic events calendar on Tuesday has UK unemployment data at 0700 GMT. In addition, the World Economic Forum's Davos Agenda continues, featuring keynote speeches from European Commission President Ursula von der Leyen and Germany Chancellor Angela Merkel.

The UK corporate calendar on Tuesday has trading statements from soft drinks maker AG Barr and retirement specialist Saga. Property company Crest Nicholson and personal care products maker PZ Cussons report interim results.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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