London open: Stocks fall amid prospect of tighter restrictions

London stocks fell in early trade on Monday amid reports that Covid-19 restrictions in England were set to get even tougher.

At 0840 GMT, the FTSE 100 was down 0.5% at 6,841.21, while sterling was 0.5% weaker versus the dollar at 1.3497.

Investors were digesting reports over the weekend that the government is considering tightening restrictions even further, with masks in certain outdoor settings, curfews and even a ban on people leaving the house more than once a week said to have been discussed.

Spreadex analyst Connor Campbell said: "Without the artificial buzz of the New Year, or a seismic event like a pair of Senate races, the markets were forced to contend with the day-to-day realities of trading in 2021.

"For the FTSE, that means the prospect of even tighter restrictions in the UK, as experts believe the current level of lockdown isn’t having the desired effect. Practically, any further measures the government could implement should have minimal impact on the blue chip index’s individual components. Symbolically, however, the shift towards harsher constraints may undermine the FTSE’s recent growth."

Campbell said things could get worse this afternoon if Europe takes its cues from the US. He noted the Dow is heading for a 0.5% drop, one that would knock it below its 31,000 milestone. "

Part of that will be a natural reaction to its recent record-breaking gains; and part of it will come from anxiety over the tinderbox political situation domestically.

"The Democrats are moving to try and impeach Donald Trump before Joe Biden’s inauguration on January 20th. And while that won’t have too much of an effect on actual governance - something Trump hasn’t been interested in since November anyway - it is indicative of an unstable, and potentially violent, few months in America."

In equity markets, Smith & Nephew lost ground after the medical technology company said it expects to report a 7% decline in fourth-quarter underlying revenue and a 12% drop in full-year revenues, as more medical procedures are postponed due to rising numbers of coronavirus infections.

Ladbrokes owner Entain was in the red after its chief executive quit, with the company a takeover target for MGM Resorts International.

Travel and leisure stocks also took a hit amid the prospect of tighter restrictions, with TUI, Cineworld and Mitchells & Butlers all lower.

On the upside, JD Sports rallied after saying it was confident headline pre-tax profit for the year to 30 January 2021 will be "significantly" ahead of current market expectations of around £295m as demand has remained robust throughout the second half.

Signature Aviation surged after Gatwick Airport co-owner Global Infrastructure Partners has swooped to buy the company for $4.63bn (£3.43bn), beating a rival offer from private equity outfit Blackstone Group and Microsoft founder Bill Gates.

Market Movers

FTSE 100 (UKX) 6,841.21 -0.47%
FTSE 250 (MCX) 21,042.34 -0.10%
techMARK (TASX) 4,178.24 -0.26%

FTSE 100 - Risers

JD Sports Fashion (JD.) 891.40p 4.77%
Pershing Square Holdings Ltd NPV (PSH) 2,725.00p 1.68%
Standard Life Aberdeen (SLA) 308.10p 1.08%
Smurfit Kappa Group (SKG) 3,698.00p 0.87%
Pennon Group (PNN) 979.20p 0.87%
AstraZeneca (AZN) 7,534.00p 0.84%
Burberry Group (BRBY) 1,848.00p 0.74%
Rightmove (RMV) 639.40p 0.72%
Polymetal International (POLY) 1,782.50p 0.68%
Associated British Foods (ABF) 2,234.00p 0.68%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 237.10p -2.35%
Smith & Nephew (SN.) 1,587.50p -1.98%
Compass Group (CPG) 1,452.50p -1.43%
Fresnillo (FRES) 1,187.50p -1.41%
International Consolidated Airlines Group SA (CDI) (IAG) 154.55p -1.40%
Taylor Wimpey (TW.) 167.30p -1.27%
Entain (ENT) 1,458.00p -1.15%
BAE Systems (BA.) 495.40p -1.04%
Next (NXT) 7,606.00p -1.02%
Informa (INF) 560.60p -0.99%

FTSE 250 - Risers

Signature Aviation (SIG) 438.40p 7.98%
Rank Group (RNK) 146.20p 4.43%
Oxford Instruments (OXIG) 2,075.00p 4.06%
RIT Capital Partners (RCP) 2,125.00p 2.41%
ITV (ITV) 112.65p 2.41%
Big Yellow Group (BYG) 1,125.00p 2.37%
Brewin Dolphin Holdings (BRW) 317.00p 2.26%
St. Modwen Properties (SMP) 390.00p 2.23%
Primary Health Properties (PHP) 160.40p 1.91%
Contour Global (GLO) 219.00p 1.86%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 356.30p -6.24%
Morgan Sindall Group (MGNS) 1,502.00p -4.21%
Cineworld Group (CINE) 67.18p -3.12%
Countryside Properties (CSP) 442.60p -1.99%
National Express Group (NEX) 258.80p -1.97%
Rathbone Brothers (RAT) 1,580.00p -1.86%
Hammerson (HMSO) 23.56p -1.83%
Diploma (DPLM) 2,196.00p -1.79%
Centrica (CNA) 49.30p -1.71%
Greencore Group (GNC) 108.20p -1.64%