There is an emerging new sector of FTSE 100 shares whose products and services have become inextricably linked to the coronavirus lockdown.

The economy has changed beyond recognition due to the spread of coronavirus and the subsequent lockdown and social distancing measures.

The initial market reaction was of course a devastating selloff that saw major global equity indices lose around a third of their value.

Equity indices, including the FTSE 100, have since stabilised and even started to move higher, helped by a recovery in beaten down cyclical shares, but also by an emerging new sector of those shares that benefit from the lockdown.

There are two factors behind the link to the lockdown; firstly those shares that enjoy increased revenue from the lockdown and those shares that benefit from increased buying by investors seeking a safe haven through the volatility.

These shares have outperformed during the coronavirus lockdown and will likely continue to do so whilst measures remain in place, until such a point they are lifted, when these stocks could very well underperform the wider FTSE 100 benchmark.

Ocado 

Ocado has probably earned the crown as the ultimate lockdown share after consistently breaking record highs and posting gains of 25% in 2020.

Consumers have flocked to Ocado’s website to avoid going to the supermarket to the extent the site crashed and others were unable to get a delivery slot for weeks.

However the problems are now subsiding and Ocado is likely to have gained thousands of new customers that will continue to use their service after lockdown measures lift.

Sainsbury

Supermarkets are likely to be a beneficiary of the lockdown due to lack of alternatives for consumers who don’t buy items online. While demand for food remains relative steady after the spike higher due to panic buying, supermarkets will benefit from consumers purchasing goods they would have bought elsewhere during their trip to the supermarket.

Sainsbury is particularly well placed to benefits from this with their in-store Argos offering, something that makes in stand out among the FTSE 100’s supermarket, although the likes of Morrisons and Tesco could well be be included as lockdown shares.

In addition to the sales associated to Argos, with consumers unable to take holidays or eat out, it is likely they will spend more on higher quality items from Sainsbury as well as increasing the number of meals consumed as a result of shopping in Sainsbury’s stores.

Polymetal & Fresnillio 

Gold and other precious metals provide investors with a safe have during times of volatility, as well as providing a hedge against inflation.

The spread of coronavirus has provided plenty of market volatility and gold has reacted accordingly; the yellow metal is up 16% year-to-date.

In addition, to market volatility lifting gold, the prospect of higher inflation will provide support for the gold price going forward.

For the time being, an increase in the price of everyday goods will be largely offset by the drop in the price of oil but the unprecedented levels of monetary stimulus from central banks and fiscal cash injections will lead to higher level of inflations as economies begin to open up.

FTSE 100 Polymental & Fresnillo have been on a tear since the beginning of lockdown measures and are set to remain elevated during the period of uncertainty.

 

Reckitt Benckiser

The FTSE 100 owner of Dettol, Cillit Bang and Air Wick will have experienced an uptick in demand during lockdown panic buying, and the home-oriented products are expected to experience steady demand throughout the lockdown.

RB is also one of the traditionally defensive ‘bond-proxy shares’ which will become increasingly attractive to investors whilst government bond yields remain depressed.

AstraZeneca

The entire world is attempting to move heaven and earth in order lift the coronavirus lockdown. The key to lifting the lockdown are effective measures prevent the spread of COVID-19 and reduce the death rate in those infected by the virus.

A vaccine is many months away so effective treatment of severely ill patients will be the most immediate method of fighting COVID-19.

AstraZeneca is currently trialing two drugs in Calquence and Farxiga. The drugs have already been approved for the treatment of leukaemia and diabetes so it is deemed safe to conduct broad trials. We await the early results for signs of efficacy in treating COVID-19