SHARES tumbled today as Covid restrictions were lifted, with the City fretting over rising infection rates that some fear could lead to fresh lockdowns.
The FTSE 100 lost 150 points to 6860, sliding below the 7000 mark to its lowest level for several months. Falls in travel, leisure, airline and oil stocks took about £40 billion off the value of the UK’s premier share index.
The pound was also under pressure, falling by half a cent against the dollar to £1.372, a three-month low.
Neil Wilson at Markets.com said: “Freedom Day has turned into freefall day for the FTSE. Markets are forward-looking and they don’t much like what they see on the horizon with delta, rising cases, other variants and potentially a lower level of vaccine efficacy.”
The Confederation of British Industry warned that staff shortages due to the “pingdemic” could close supermarkets and bring car production to a halt.
Greene King said it has closed 33 pubs in the past week because of the number of staff forced to self-isolate by the NHS Covid app.
Russ Mould at AJ Bell said: “There is no ticker tape parade, cheers from the rooftops or people dancing in the streets as Freedom Day finally comes. The UK stock market is certainly not in a celebrating mood.”
At lunchtime today, the FTSE 100 was a sea of red with only investment group 3i keeping its head above water as traders rushed to dump stocks most exposed to fears that the economic recovery is faltering.
Rolls-Royce and British Airways owner IAG led the way with share falls of more than 4% as the fast-spreading Delta variant of Covid-19 continues to spook markets worldwide.
The risk-averse session left the FTSE 100 index trading well below the 7,000 threshold and at its lowest level since May, having opened the week 2% or 134.48 points lower at 6,873.30.
Neil Shearing, chief economist at Capital Economics, summed up the fears of many investors today as he warned Covid-19 is probably “here for the long-haul”.
Even though he doesn’t think the spread of the Delta variant will derail advanced economies, Shearing is worried about potential labour shortages and the outlook in emerging markets where vaccination rates are much lower.
He added: “Developments over the past few weeks are a timely reminder that the path back to normality is unlikely to be smooth and different countries will proceed at different speeds.”
Other casualties from the uncertain economic outlook included ITV, which fell 3.2p to 118.1p, and Primark owner Associated British Foods after sliding 2% or 51.5p to 1,997.5p.
BP and Royal Dutch Shell fell 8p to 284.25p and 30.2p to 1,338.2p respectively after OPEC+ reached an agreement to ramp up oil supply by 400,000 barrels a day in a move predicted to put downward pressure of energy prices.
The sell off was just as brutal in the domestic-focused FTSE 250 index, which dived 2% or 408.70 points to 22,058.07 after several stocks dependent on travel or the re-opening of the UK economy fell by more 5% or more.
Cruise ship operator Carnival was down 107p to 1,307.2p, Restaurant Group dropped 7.4p to 108.4p and Cineworld surrendered Friday’s big rebound to fall 3.5p to 59.5p.
Defence products firm Ultra Electronics also gave up 6p to 2,360p despite reporting a record order book and 18% rise in half-year profits to £56.5 million.
The company, which was recently the subject of tentative consolidation interest from Advent-owned Cobham, is increasingly confident about its own future prospects.
Fear was reverberating around the global markets with the Euro Stoxx down -2.06%, the Nikkei of -1.25% and the Dow Jones set to open -0.86% down.