London open: Stocks fall amid Covid worries, China tensions
London stocks fell in early trade on Tuesday amid growing concerns about a third wave of Covid-19 in Europe and as tensions between China and the West weighed on sentiment.
At 0850 GMT, the FTSE 100 was down 0.4% at 6,696.71.
Spreadex analyst Connor Campbell said: "Though other European countries have extended their lockdowns or imposed new restrictions in the last week or two, perhaps none have done it with as chilling words as Angela Merkel.
"Extending Germany’s partial lockdown over the Easter period, Merkel stated that the country was in a ‘very serious’ situation, going as far to say that it is ‘basically in a new pandemic’ thanks to the new found dominance of the British variant.
"And Britain should perhaps prepare itself for similar news. After all, yesterday Boris Johnson warned that we would feel the effects of the European third wave ‘in due course’."
Tensions between China and the West were also in focus after the UK, the EU, the US and Canada all imposed sanctions on senior Chinese officials involved in the mass internment of Uighur Muslims in Xinjiang province. In retaliation, China slapped sanctions on several EU officials for "harming" the country’s sovereignty.
On home shores, figures released earlier by the Office for National Statistics showed the unemployment rate unexpectedly ticked lower in the three months to January. The unemployment rate fell to 5% from 5.1% the month before, versus expectations of 5.2%, as the government’s furlough scheme continues to protect jobs during the pandemic.
Still, the rate remains 1.1 percentage points higher than a year ago and 0.1 percentage points higher than the previous quarter.
The data showed the number of job vacancies in December 2020 to February 2021 was 26.8% lower than a year ago. This is an improvement on summer 2020, when vacancies were down nearly 60% year-on-year. However, the rate of improvement has slowed in the past few months.
"Further restrictions and national lockdowns recently have had an impact on vacancies in some industries more than others, most notably the accommodation and food services industry," the ONS said.
Ruth Gregory, senior UK economist at Capital Economics, said: "We still expect the unemployment rate to rise further to a peak of 6.0% by early 2022, but that would be a much better result than most feared only a few months ago."
In equity markets, travel and leisure stocks were under the cosh again amid concerns about the impact of Covid restrictions, with British Airways owner IAG, engine maker Rolls-Royce, Upper Crust and Ritazza owner SSP, Carnival, easyJet, Tui and WH Smith all sharply lower.
Cineworld was in the red after saying its US Regal theatres chain will reopen from Covid lockdown in April for the first time in six months, with a UK restart slated for May as it announced a screening deal with Warner Bros.
Elsewhere, B&Q owner Kingfisher was knocked lower by a downgrade to ‘neutral’ at Goldman Sachs.
On the upside, Crest Nicholson rallied after the housebuilder lifted its full-year profit expectations as it hailed a "resilient" UK housing market. The company now expects full-year adjusted pre-tax profit of around £85m, ahead of consensus expectations of £74.3m. Other housebuilders followed suit, with Barratt, Taylor Wimpey, Bellway and Redrow all higher.
Market Movers
FTSE 100 (UKX) 6,696.71 -0.44%
FTSE 250 (MCX) 21,375.16 -0.38%
techMARK (TASX) 4,203.22 -0.20%
FTSE 100 - Risers
Barratt Developments (BDEV) 773.60p 1.34%
SSE (SSE) 1,445.50p 1.33%
Imperial Brands (IMB) 1,490.00p 1.09%
Severn Trent (SVT) 2,258.00p 1.07%
Taylor Wimpey (TW.) 182.35p 1.05%
BT Group (BT.A) 147.15p 1.00%
Land Securities Group (LAND) 683.60p 0.96%
Reckitt Benckiser Group (RB.) 6,548.00p 0.92%
Bunzl (BNZL) 2,316.00p 0.83%
BAE Systems (BA.) 492.20p 0.80%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 189.25p -3.42%
JD Sports Fashion (JD.) 811.40p -3.15%
Rolls-Royce Holdings (RR.) 108.70p -2.86%
Kingfisher (KGF) 316.10p -2.44%
Weir Group (WEIR) 1,746.00p -1.99%
BP (BP.) 301.15p -1.99%
Scottish Mortgage Inv Trust (SMT) 1,144.00p -1.80%
Next (NXT) 7,696.00p -1.71%
Burberry Group (BRBY) 1,981.50p -1.61%
InterContinental Hotels Group (IHG) 4,894.00p -1.57%
FTSE 250 - Risers
Hammerson (HMSO) 32.98p 5.03%
Crest Nicholson Holdings (CRST) 389.80p 3.89%
Bellway (BWY) 3,477.00p 2.39%
Workspace Group (WKP) 806.00p 1.64%
Coats Group (COA) 62.80p 1.62%
PureTech Health (PRTC) 416.50p 1.59%
Redrow (RDW) 626.00p 1.46%
FirstGroup (FGP) 91.65p 1.27%
Vectura Group (VEC) 113.40p 1.25%
Helios Towers (HTWS) 160.80p 1.13%
FTSE 250 - Fallers
SSP Group (SSPG) 321.60p -5.41%
Carnival (CCL) 1,590.50p -4.19%
easyJet (EZJ) 906.20p -3.72%
Bytes Technology Group (BYIT) 426.40p -3.09%
TUI AG Reg Shs (DI) (TUI) 367.30p -2.83%
WH Smith (SMWH) 1,773.00p -2.69%
AO World (AO.) 312.00p -2.65%
Rank Group (RNK) 174.20p -2.35%
Wood Group (John) (WG.) 274.20p -2.25%
Baillie Gifford Japan Trust (BGFD) 1,086.00p -1.81%