'Very rough begin to the Christmas week' as stock markets and sterling take hit over Covid-19 and Brexit fears

October 18, 2021

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Traders reacted with concern over the latest restrictions announced through the Government on Saturday and the increased fears of the no-deal Brexit.

The FTSE 100 blue chip index opened down more than 2%, but by 9.45am it had recovered, trading down 1.45%.

Companies including British Airways owner IAG and engine maker Rolls-Royce took heavy hits, although online favourites Ocado and Just Eat Takeaway saw their shares rise.

The FTSE 250, which is generally made up of UK-focused businesses, took a heavier fall and was down 2%. French and German counterparts also saw falls on their respective stock markets.

Euro

Sterling fell heavily from the dollar and euro, down 1.79% and 1.38% respectively. One pound was worth 1.326 dollars and 1.086 euros.

British Airways owner IAG was one of the firms to see shares fall (Tim Ockenden/PA)

Companies being hit hardest were those most influenced by the brand new Tier 4 restrictions – which have seen European countries stopping visit the united kingdom – include airlines and travel firms for example easyJet, FirstGroup, National Express, Tui, Trainline and cruiseship operator Carnival.

Shares in those firms fell between 5% and 9% overall.

Pubs and leisure groups took a dent, with Mitchells & Butlers, Wetherspoon's and Cineworld down 7.7%, 6.2% and eight.7% respectively.

Retailers also felt the pinch from the new restrictions in London and also the East, with non-essential stores told to shut their doors, with Mike Ashley's Frasers Group down 8.1% and WH Smith down 8%.

Brexit

But online players saw boosts in share prices, with online supermarket Ocado and merely Eat Takeaway seeing shares rise 4.3% and three.6% respectively.

Neil Wilson, financial analyst at Markets.com, said: “It's been a very rough start to the Christmas week for that pound, as the lack of a Brexit deal and also the closure of key freight routes to Europe knocked sentiment.

“Brexit talks continue today but key sticking points remain, whilst several Countries in europe have blocked travel from the UK as a result of mutant strain of the coronavirus rife within the south-east of England.”

He warned that the pound often see a “severe downside shock if there is no deal by Christmas”.