Fresh lockdown fears hit stocks hard

Following a briefing from the Chief Medical Officer (CMO) Professor Chris Whitty regarding a potential Covid-19 second wave, stocks were hit hard.

Susannah Streeter, Senior Investment and Markets Analyst, Hargreaves Lansdown, comments: “The FTSE 100 is worst hit among its European peers with a storm of pessimistic news swirling, affecting sectors across the board. The travel industry has again been left reeling after news that the UK government is seriously considering another national lockdown.

“British Airways’ owner IAG is one of the biggest fallers as tougher widespread restrictions on movement are likely to push any recovery for the airline industry even further into the future and that concern has had a domino effect on aircraft engine manufacturer Rolls Royce, as investors see no end in sight for the falling demand for new planes. Rolls Royce has already cut staff and shed assets and now, to help see it through the crisis, it’s being forced to look closely at how it can raise £2.5bn, with a rights issue now on the cards.

“The prospect of evening coronavirus curfews, after a summer of recovering sales, is a bitter pill to swallow for the hospitality industry and that’s pushed Wagamama owner, The Restaurant Group, down by more than 18 per cent and pub chain J D Wetherspoon by almost 10 per cent.

Susannah continues: “Financial stocks have also taken a pummelling this morning with HSBC and Standard Chartered falling by more than 5% following allegations they moved large sums of potentially suspicious funds over a period of two decades. But punches are still coming at the financial sector from the effects of the pandemic too.

“Barclays is down by around 8% today as many investors fret about the effect of ultra-low rates on banks’ bottom line, the impact the expected rise in unemployment will have on bad debt and the potential for a housing market fall as the recession bites. If you add the prospect of a no-deal Brexit into the murky mix, there is little surprise so many investors seem to have caught a severe case of the jitters today.’’