FTSE 100 set for worst day in three weeks on second wave fears, fading stimulus hopes

People walk along an almost empty street in Liverpool, northwest England on October 14, 2020, as new local lockdown measures come in to help stem a second wave of COVID-19.

paul ellis/Agence France-Presse/Getty Images

U.K. blue chips on Thursday were on course for their worst single-day performance in three weeks, hit by the twin impact of the fading possibility of U.S. stimulus and increased restrictions on mobility in the wake of a second wave of coronavirus cases.

The FTSE 100
dropped 2% in afternoon trade, which would be the worst decline since the 3.4% drop on Sept. 21.

Hotel-and-restaurant company Whitbread’s
shares slumped 6% on the likelihood of increased restrictions for London, combined with new measures limiting potential customers in France and other European destinations.

“In general, these restrictions will sacrifice some level of economic activity so that the spread can be contained. Market participants appear to have not discounted this scenario, despite the possibility of a second wave for months,” said Charles Campbell, managing director at MKM Partners.

News over a lack of U.S. stimulus also put a cloud over markets. Treasury Secretary Steven Mnuchin conceded there was only a slim possibility of a deal as he criticized his counterpart in talks, House Speaker Nancy Pelosi.

For now, markets seem relatively unconcerned about the state of U.K.-European Union negotiations on a trade deal. Thursday marked the U.K.’s unofficial deadline for striking a deal, but the two sides are continuing to talk.

The oil sector slumped, with Royal Dutch Shell
losing 5% and BP
dropping 4%. Their French rival, Total
said refining margins were negative in the third quarter, and Brent crude-oil futures
slipped 3%.

Just Eat Takeaway
was one of the few advancers, edging up 1% on the possibility of increased business from consumers forced to stay at home.

Pub chain Marston’s
a FTSE 250 component, fell 4% after saying it may cut up to 2,150 jobs due to new restrictions in cities including Liverpool.

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