FTSE falls as regional tiered Covid restrictions announced

Update (12:50): UK stocks have fallen further into the red after the government unveiled the division of England’s local authorities into tiered restrictions that will apply following the end of the national lockdown on 2 December.

Leisure stocks were among the heaviest fallers following the announcement from health secretary Matt Hancock.

Only three local authorities have been placed in tier one, which features the most relaxed restrictions: the Isle of Wight, Cornwall and the Isles of Scilly.

Large swathes of England have been placed in tier three, featuring the toughest restrictions, including the closing of hospitality except for takeaway services. Birmingham, Manchester, Bristol, Newcastle, Nottingham and Leicester have all been placed under the toughest restrictions.

London and large parts of the East, South East and South West of England have been placed in tier two, which allows pubs serving food and restaurants to remain open, though no mixing of households is allowed indoors.

The FTSE 100 fell further into the red, down 0.6% at 6,356, though the FTSE 250 index of ‘mid-cap’ stocks, which derive more of their revenues from the UK economy, was hit harder, falling 1.2%.

Travel and leisure stocks were among the heaviest fallers. Tenpin bowling operator Ten Entertainment (TEG) was down 5.4% at 201p while SSP (SSP), which operates sandwich shops in train stations, was down 5.1% at 332p. WH Smith (SMWH), which relies on shops in airports and railway stations for a large portion of its earnings, was down 5.35 at £14.20.

Banks were down on fears for the UK economy. Virgin Money UK (VMUK) added to losses, down 10.3% at 125.7p, while Lloyds (LLOY) fell 4.6% to 36.4p and Metro Bank (MTRO) fell 4.8% to 113.8p.

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(9:48) FTSE slips ahead of tiers announcement

UK stocks slipped on Thursday, with caution prevailing as investors waited to find out more details on post-lockdown restrictions in England.

The FTSE 100 fell 19 points, or 0.3%, at the start of what was expected to be a relatively tranquil session across Europe with US markets closed.

Health secretary Matt Hancock will set out in parliament today which of the three tiers each local authority in England will fall under, ranging the most relaxed restrictions in tier 1 to the strongest curbs in tier 3, when the national lockdown ends next week.

‘How strict the rules are, particularly in the large cities will determine how quickly the UK economy will be able to bounce back from the latest national lockdown,’ said Fiona Cincotta.

The City Index analyst added that European bourses more broadly looked set for a relatively quiet session, with Wall Street shutting up shop for Thanksgiving.   

The market appears to have taken German chancellor Angela Merkel’s decision to extend the country’s own lockdown until 20 December, amid Covid-19 cases surging, ‘largely in its stride’, according to Michael Hewson, chief analyst at CMC Markets.

‘However, the decision by the German government to go down this road suggests that the coming winter is likely to be a long hard slog for businesses all over Europe, as populations tire of having their freedoms restricted, and concerns grow about the prospect of much longer term economic damage,’ he said.

House builder Persimmon (PSH) led the fallers, down 4% to £27.20, while Imperial Brands (IMB) continued to give up recent gains, shedding 3.8% to £14.34. Lloyds (LLOY) fell 3.2% to 36.9p, with other UK lenders also declining.

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Aviva (AV) slipped 1.1% to 324p as the insurer rebased its dividend. The company now expects to pay a full year dividend of 21p per share, down from 30.9p last year

DCC (DCC), which has a large oil sales and distribution division, rose 3% to £58.24 as Brent crude hit an eight-month high of $48.61 a barrel, a level not seen since early March.

Paddy Power owner Flutter Entertainment (FLTR) rose 4.6% to £139.15, while Polymetal (POLY) was up 3% to £16.10.

The ‘mid-cap’ FTSE 250 index dropped 87 points, or 0.4%, to 19,482.

Virgin Money UK (VMUK) fell 7.5% to 129p, as the market continued to digest lacklustre results yesterday. Bodycote (BOD) dropped 5.9% to 722p.

Gold miners led the risers, with Petropavlosk (POG) gaining 5% to 27.2p and Centamin (CEY) up 3.4% to 114p. 



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