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Shares in Europe took a hit when they opened in London as investors digested the latest cases of coronavirus on what has been dubbed ‘freedom day’ in England.
England moved to its final stage of easing restrictions on coronaviruses on Monday, despite concerns from scientists over the increasing number of cases and the faster-spreading Delta variant of the virus becoming the dominant strain.
The FTSE 100 (^ FTSE) was down 1.7% by mid-morning in London. The German DAX (^ GDAXI) also fell 1.6% and in Paris the CAC 40 (^ FCHI) fell 1.7%.
Investor confidence has taken a hit despite “Freedom Day”.
“Investor confidence in the UK fell 5% in July compared to June, a steeper drop than the 2% on average for regions around the world,” said Susannah Streeter, senior investment analyst and markets at Hargreaves Lansdown.
“The sharp rise in Covid infection rates across the country and concerns over further easing of restrictions are likely behind the drop, which is identified in HL’s monthly investor confidence survey.”
Prime Minister Boris Johnson, Chancellor Rishi Sunak and new Health Secretary Sajid Javid are all self-isolating amid what is called a ‘pingemia’ – a proliferation of notifications telling people to self-isolate. isolate because of having been in contact with someone who tested positive for COVID.
Meanwhile, nightclubs may reopen for the first time since March 2020, with capacity limits lifted for all venues and events.
“A lot of the stocks that are leading the UK stock market down are linked to travel and leisure, suggesting that investors are extremely worried that we lifted the restrictions too early and that another foreclosure could take place in a months or two, ”Russ Mold said. , director of investments at AJ Bell.
“Covid is spreading rapidly again and airlines, restaurants and leisure businesses might not get the strong summer trade they have long hoped for. The fact that Cineworld is down 8%, Carnival is down 7% and Restaurant Group 4% implies that investors believe the reopening of the business is now a dud. “
Overnight in Asia, equities broadly fell. Japan’s Nikkei (^ N225) ended down 1.3% and the Hong Kong Hang Seng (^ HSI) fell 1.7%. During this time, the SSE Composite (000001.SS) was flat.
The attention of investors has turned from the economic recovery to risk factors such as inflation and the increase in the number of COVID cases.
US equity futures have been set for a lower opening, following declines in Asia.
Read more: Busiest six months for UK home sales with huge inventory shortage
S&P 500 futures (ES = F) were trading down 0.4% to open in London, while the Dow (YM = F) looked set to open down 0.5%. The Nasdaq (NQ = F) was heading for 0.2% declines at the opening.
“Basically the stock market and its players are addicted to stimulus, and the fact that there won’t be any new stimulus coming, it slows down the current stock rally,” said Naeem Aslam, chief market analyst at AvaTrade.
“In fact, traders fear that aid provided during the pandemic may start to decline as the global economy continues to recover, causing investors to lose appetite for riskier assets.”
Watch: “Freedom Day” in England? Not for Boris Johnson
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