The FTSE 100 dropped on Friday as fears over another wave of COVID spread across Europe as threatened another economic downturn.
Austria, with a population of 9 million, announced they were going into a full lockdown as cases and hospitalisations rose. Germany said they were not ruling out a full lockdown but were monitoring the situation.
“We are now in a situation – even if this produces a news alert – where we can’t rule anything out,” said acting health minister Jens Spahn in news conference.
The prospect of Europe’s largest economy going into another lockdown rocked major European indices. The German DAX was down over 0.5% whilst the Italian FTSE MIB shed 1.5%. The French CAC 40 dropped by 0.7%.
The FTSE 100 was unable to hold onto early gains driven by optimism around upbeat retail sales figures and stronger miners, falling by 0.6% in mid afternoon trade on Friday.
Unsurprisingly, travel shares were the hardest hit with airline IAG crashing 5.8% to 145p. Engine maker Rolls Royce wasn’t far behind giving up 5.65% of their value.
Kingfisher was another faller hurt by news the DIY boom was slowing driving a 6% drop in their reported revenue in the last quarter.
“Lockdown winners were always going to face tough year-on-year comparatives in 2021 and no more so than Kingfisher. The DIY boom that kicked off in 2020 has had considerable legs and still shows positive momentum. Unfortunately, it’s very hard to grow by a very large amount two years in a row, and so Kingfisher is now lamenting a drop in third quarter like-for-like sales,” said AJ Bell investment director Russ Mould.
Ryanair were weaker as they announced their departure from the London Stock Exchange. Ryanair will shortly only be listed in Dublin as it seeks to reduce costs and the burden of Brexit.
“For a business with a razor sharp focus on costs it seems the expense of maintaining a UK listing just doesn’t stack up any more given a decline in trading volumes and so Ryanair is planning a pre-Christmas getaway,” said Russ Mould.
“If Shell’s decision to pivot to London was chalked up as a Brexit win, this is likely to be characterised as a Brexit loss in some quarters, coming after restrictions were introduced on UK investors buying its shares at the start of the year.”
“Ryanair is desperate to be majority EU-owned in order to retain full licensing and flight rights in the bloc following the UK’s exit from the EU.”