(Alliance News) - The FTSE 100 is set to open lower on Tuesday amid tougher virus restrictions across Europe, including London and other parts of southern England.
"In a test for the pro-reflation trade, social-mobility restrictions are tightening significantly in Europe and potentially in the US for the first time since the first Covid-19 vaccine was announced on Nov 9," said Axi's Stephen Innes.
He noted: "Germany will enter hard lockdown on Wednesday; non-essential services will be shuttered in the Netherlands until Jan 19, London enters the tightest tier of restrictions imminently, while New York City could be on the verge of locking down."
In early UK company news, London West End landlord Shaftesbury said the city's move to Tier 3 restrictions will "severely" hit trading conditions for its occupiers, JD Sports unveiled the acquisition of Shoe Palace in the US, and IG Group guided to a sharp rise in first-half net trading revenue.
IG says futures indicate the FTSE 100 index of large-caps to open 15.43 points, or 0.2%, lower at 6,516.40 on Tuesday. The FTSE 100 closed down 14.92 points, or 0.2%, at 6,531.83 on Monday.
A new strain of coronavirus has been identified in southern England as tougher restrictions were imposed in London. The capital and parts of Essex and Hertfordshire will face Tier 3 restrictions from Wednesday following "very sharp, exponential rises" in cases.
The Health Secretary said there was nothing to suggest the variant was more likely to cause serious disease, and he suggested the vaccine should still be effective.
London Mayor Sadiq Khan said the decision was "incredibly disappointing" for businesses but urged the capital's residents to follow the rules.
As well as the restrictions on hospitality, the move means people should avoid travelling into or out of the area – potentially depriving Oxford Street and London's other shopping centres of much-needed custom in the run-up to Christmas.
London West End landlord Shaftesbury noted the area's move to Tier 3 in its annual results on Tuesday, and said it anticipates further measures to support its occupiers will be required as trading conditions will be "severely impacted during the important period" leading up to Christmas and over the New Year.
The property owner noted that the tighter restrictions will have an "adverse impact" on both its hospitality and retail occupiers' ability to trade, and will thus likely hit near-term rent collection.
Shaftesbury reported a net asset value per share of GBP7.43 as at September 30, down 24% on GBP9.82 a year ago. The firm said its portfolio valuation decreased on a like-for-like basis by 18% to GBP3.1 billion over the year.
Shaftesbury reported a pretax loss of GBP699.5 million, swinging from a profit of GBP26.0 million in the prior year.
In other UK company news, JD Sports Fashion has bought San Jose, California-based Shoe Palace for USD325 million. Of this consideration, USD100 million has been deferred.
"The acquisition of Shoe Palace complements the group's ongoing positive developments from the existing Finish Line and JD fascias in the United States, which includes the recent opening of JD's flagship store in Times Square, New York," said JD Sports.
For 2019, Shoe Palace delivered a pretax profit of USD52 million on revenue of USD435 million. It has 167 stores and will continue to be run by its founders, though share ideas with JD's other US operation, JD Finish Line.
IG Group Holdings reported a sharp rise in revenue for its financial second quarter, which ended November 30, and guided to first-half growth.
The online trading platform for contracts-for-difference said it performed at "comparable levels" in the second quarter following a "very strong" start of the year, generating revenue of around GBP207 million in the second quarter versus GBP120.8 million a year ago.
This was driven by elevated trading volumes across a larger total active client base of 207,000 in the quarter, IG said.
Net trading revenue for the first six months of the current financial year is expected to be around GBP416 million, up sharply on GBP249.9 million a year ago.
Sterling was soft at USD1.3331 early Tuesday from USD1.3340 late Monday after early UK economic data showed the jobless rate edged up in October, though at a slower pace than forecast by analysts.
For the three months to October, the UK unemployment rate was 4.9%, up on the 4.8% recorded for the three months to September though beating expectations, according to FXStreet, of 5.1%. October's reading was 1.2 percentage points higher than a year earlier, the ONS said.
Early estimates for November indicate that the number of payrolled employees fell by 2.7% year-on-year, which is a fall of 781,000 employees. Since February - just before the pandemic gripped the UK - 819,000 fewer people were in payrolled employment.
The claimant count increased slightly in November, the ONS added, to 2.7 million. This represents a monthly increase of 2.5% and has more than doubled since March.
The euro traded at USD1.2143 early Tuesday in London, higher than USD1.2130 late Monday.
In the US on Monday, Wall Street ended mixed, with the Dow Jones Industrial Average ending down 0.6% and the S&P 500 down 0.4%, but the Nasdaq Composite closing 0.5% higher.
Joe Biden said Monday that US democracy proved "resilient" against Donald Trump's "abuse of power" after the Electoral College confirmed him as the next president, shutting the door further on unprecedented efforts to overturn the results.
Trump continues to maintain that he was cheated of victory, even if his lawyers have not persuaded one court that they have a case. On Monday he announced that Attorney General Bill Barr, who contradicted his fraud claims, will leave his post next week.
Gold was quoted at USD1,842.94 an ounce early Tuesday, higher than USD1,826.61 on Monday. Brent oil was trading at USD50.13 a barrel, up from USD49.24 late Monday in London.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.2%. Against the yen, the dollar edged up to JPY104.06 versus JPY104.00.
In China, the Shanghai Composite ended down 0.1%, while the Hang Seng index in Hong Kong is down 0.6%. Â
China's retail sales grew in November, official data showed overnight, as consumers continued their return to spending with the country's Covid-19 outbreak largely brought under control.
Retail sales in the world's second-largest economy rose 5% on-year last month, the National Bureau of Statistics said. The figure was in line with forecasts by analysts polled by Bloomberg and up from 4.3% growth last month on the back of a week-long national holiday in October.
Industrial production growth in November grew slightly to 7%, ticking up from 6.9% last month.
The economic events calendar on Tuesday has US import and export readings at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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