London pre-open: Stocks seen lower on Covid worries; jobs data in focus
London stocks were set to fall at the open on Tuesday, with worries about a new strain of Covid-19 and the capital’s plunge into Tier 3 set to weigh on sentiment.
The FTSE 100 was called to open 19 points lower at 6,512.
CMC Markets analyst Michael Hewson said: "European markets underwent a rather mixed session yesterday, with the FTSE100 underperforming after it was announced that London and a good part of the south east of England was being put into tier 3 restrictions at midnight tonight, due to a new strain of the coronavirus which was spreading at a faster rate. This of course raises the very real concern that the vaccine might not be as effective, and while there is no evidence that it would be, the revelation of this new strain has added to the uncertainty in markets in the lead up to Christmas.
"While disappointing, the rise in infections is not a UK phenomenon, we’ve already seen Germany and France and the Netherlands extend their own harsher restrictions into next year, while at the same time being behind the curve in their own vaccination programs, which haven’t even begun yet.
"On the plus side we did see a marked improvement in sentiment over a renewed sense of optimism that the UK and EU might be able to bridge the gap that currently exists between them on the key elements of the level playing field and fishing."
Investors will also be mulling the latest UK jobs data from the Office for National Statistics, which showed that redundancies rose to a record high of 370,000 in the three months to October as the coronavirus pandemic continued to take its toll.
The unemployment rate rose to 4.9% from 4.8%, coming in a little better than expectations of 5.1%.
In corporate news, JD Sports Fashion said it has bought US-based Shoe Palace for $325m along with an equity share in the enlarged group for the company’s founders.
Based in San Jose, California, Shoe Palace was established in 1993 by the Mersho family and currently has 167 stores, most of which trade under the Shoe Palace banner. It is operated by four brothers from the Mersho family who head up the various operating functions across the business and will receive a 20% stake of the US business worth around $356m.