PM’s statement, commodity stocks and strong pound drag FTSE lower

Boris Johnson’s latest announcement on regional restrictions, poor performing commodity stocks and a bounce in the pound ensured the FTSE 100 closed in the red on Monday.

The Prime Minister announced a three-tier system of local alert levels, with pubs and bars closing across Merseyside on Wednesday after the Liverpool city region was named in the most serious category.

Pub, bar, gym and casino owners were largely lower after the PM confirmed their sites would be shut in areas placed into the most serious category.

London’s top flight closed 15.27 points lower at 6,001.38 at the end of trading on Monday.

Sentiment was much more positive across the other major global markets, which all closed higher amid hopes that there will be agreement on US stimulus plans.

Connor Campbell, financial analyst at Spreadex, said: “Hopes that Covid-19 stimulus should arrive in the next few months, be it via an agreement between Republicans and Democrats, or a blue wave come November, lifted Wall Street at the start of Monday’s trading.

“With the pound up against the dollar and the euro, at the start of the week with an ostensible Brexit ‘deadline’ on Thursday, the FTSE could not join in, instead falling.

“The index was also harmed by an unravelling set of commodity stocks, and the pressure felt by Boris Johnson’s latest Covid-19 announcement, announcing new tiered lockdown system, and which regions would be hit by what restrictions.”

In Europe, stocks opened higher after a bullish run by the Asian markets and kept up momentum after Wall Street’s strong opening.

The German Dax increased by 0.67%, while the French Cac moved 0.71% higher.

Meanwhile, sterling climbed as traders moved into the currency in favour of stock amid concerns over further lockdown restrictions.

The pound rose by 0.11% versus the US dollar at 1.306 and was up 0.32% against the euro at 1.106.

In company news, Aveva Group saw shares slide after it said its revenues for the past six months were dented by currency headwinds and delayed contracts.

The FTSE 100 software specialist reported that its organic revenue fell by 12% for the six months to September.

Shares were 121p lower at 4,615p at the close of play as a result.

Elsewhere, British Airways owner IAG dipped after BA chief Alex Cruz was shown the door as the airline struggles to cope with the coronavirus pandemic.

It finished 1.75p lower at 101.75p after the group announced that he stepped down after four and a half years in the role, confirming he will be replaced by Sean Doyle.

Shares in Ladbrokes owner GVC fell after it said it has been given German licences for a number of its betting brands and the move will impact earnings by up to £40 million a year.

Shares slipped 25.5p to 1,065p.

The price of oil moved back into the red after recent concerns over supply, linked to hurricanes in the Gulf of Mexico, started to ease.

The price of a barrel of Brent crude oil decreased by 2.82% to 41.64 US dollars.

The biggest risers on the FTSE 100 were Scottish Mortgage Investment Trust, up 32p at 1,056p; up 8.6p at 313.8p; Ocado, up 61p at 2,443p; and SSE, up 30p at 1,326p.

The biggest fallers of the day were Rolls-Royce, down 28.35p at 194.85p; Next, down 246 at 6,212p; Whitbread, down 90p at 2,313p; and Smiths Group, down 43.5p at 1,399p.