FTSE slumps 2% on lockdown jitters and Brexit fears

The FTSE 100 has slumped into the red on fears of stricter coronavirus lockdown measures and Brexit uncertainty as prime minister Boris Johnson’s self-imposed deadline day for negotiations with the European Union arrives. 

A broad-based sell-off sent the UK blue-chip index 136 points, or 2.3%, lower to 5,799, with nearly every single stock in the red.

Fiona Cincotta, analyst at City Index, said there was little to buoy sentiment this morning.

‘Covid-19 cases are rising, in some cases at an alarming rate and tougher lockdown restrictions are being implemented,’ she said. 

‘Johnson is disappointed by Brexit talk progress and a US stimulus agreement is still some distance away – which makes it hardly surprising that European bourses are coming out of the starting blocks on the back foot.’ 

Many European countries have already been forced to impose tougher restrictions on citizens, with a 9pm to 6am curfew in place in Paris, and Germany limiting gathering and putting curfews on bars and restaurants in place. In the UK there is increasing support for a two-to-three week ‘circuit breaker’ lockdown.

Richard Hunter, head of markets at Interactive Investor, said Covid-19 had ‘resurfaced uncomfortably in some areas’ and hopes of an imminent vaccine are ‘in some doubt’ after pharma group Johnson & Johnson became the latest to press pause on its human trials this week.

Pressure was added as Brexit deadline day finally arrived with little hope of a trade deal with the EU appearing. Johnson said he was ‘disappointed’ that talks with the EU had failed to make progress. 

At the first summit since the pandemic, EU leaders are expected to conclude that progress on trade negotiations is insufficient, potentially forcing Johnson into extending his self-imposed deadline. 

‘As the latest Brexit deadline approaches, seemingly without sufficient progress, it appears that the optimal outcome for now would be an extension to the talks in a mutual effort to avoid a no-deal outcome,’ said Hunter. 

Leisure and travel-focused stocks took the brunt of the sell-off, with Premier Inn owner Whitbread (WTB) shedding 6.2%, or 140p, to trade at £21.05, British Airways owner International Consolidated Airlines (IAG) down 5.9%, or 5p, at 92p, and the world’s largest catering group Compass (CPG) 4% lower at £11.39. 

It was the same story for UK ‘mi-cap’ companies on the FTSE 250, which fell 1.7%. Domino’s (DOM) slumped 7.8%, or 29p, to 343p, budget airline EasyJet (EZJ) fell 6.4% to 464p and Cineworld (CINE) was down 5.9% at 25p. 

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