FTSE 100 down on lockdown fears

The FTSE 100 fell in early trading on Wednesday over concerns of new Coronavirus restrictions.

Although there was optimism over achieving the US stimulus bill, the growing fears of new lockdowns across Europe dampened the blue-chip index.

Connor Campbell from Spreadex said: “Nancy Pelosi and Steven Mnuchin appeared to have made progress on a stimulus agreement – the House Leader said she was ‘optimistic’ a deal could be struck in the next few days – but with Mitch McConnell reportedly privately telling Republican senators he has advised the White House to nix the package.

“This because it would put senators up for re-election in the tricky position of either going against the President, or backing a deal their fiscally conservative base would be opposed to.”

Campbell added: “As tighter restrictions are introduced across the UK and Europe, investors are clearly concerned that a new lockdown will lead to slower economies.

“The FTSE dropped 0.8%, sinking back to 5850 after straining to finish just above 5900 on Tuesday. Its morning was exacerbated by a sharp rise by sterling, which was up half a percent against the dollar and 0.3% against the euro following a 0.5% increase in UK inflation in September. The strength of that rise is perhaps surprisingly, given the lack of Brexit deal progress – or, rather, the active pursuit of a no deal exit – in the last few days.

“Over in the Eurozone, as the continent continues to shutter towns and cities to combat coronavirus, the DAX dipped under 12700 to hit a near one-month low as it fell 0.6%, with the CAC also down 0.5%.”

Today saw inflation increase from 0.2% in August to 0.5% in September, helped up by the Eat Out to Help Out scheme, which ran through the month of August, and over 100m meals were bought.