FTSE 100 bounces back as investors absorb impact of mutant strain
The FTSE 100 inched into the green on Tuesday even as the prospect of another national lockdown loomed amid concerns of a new strain of coronavirus.
London’s blue-chip index opened 0.43 per cent lower to 6,388 points before bouncing back to trade up 0.35 per cent by 9.30am.
The more domestically focused FTSE 250 is up 1.1 per cent.
It came after a manic Monday in which investors were spooked by the imposition of fresh lockdown restrictions in London and the South East amid a new easily transmissible strain of the virus.
“Yesterday’s declines were driven by investors getting a cold shower from Covid-related setbacks. Optimism had been running high and so the sudden escalation of the new virus variant and subsequent movement and business trading restrictions caught investors off guard,” said Russ Mould, investment director at AJ Bell.
In a press conference on Monday evening, the government’s chief scientific adviser, Sir Patrick Vallance, warned more areas could be placed under Tier 4 restrictions.
“From a consumer and investors sentiment perspective, the new variant of coronavirus is likely to cause more damage to the global economy,” said Naeem Aslam, chief market analyst at Ava Trade. “This also means that the government officials and monetary policy members need to reload their guns as we could be in for a rough year.”
This morning the home secretary refused to rule out another lockdown in the new year if the virus continued to spread.
Speaking on Sky News, Priti Patel said: “If new strains appear, and this virus has been mutating in many ways already, then of course all measures are under review.
“If the virus continues to spread then we will take stronger measures… but it’s not for me to preempt any change.”
Optimism was mirrored across Europe with Germany’s Dax opening 1.33 per cent higher. France’s Cac followed suit, trading up 1.3 per cent.
“The new variant of coronavirus, if there is one, has overshadowed everything,” Aslam added.