FTSE 100 set to tumble after PM imposes seven-week coronavirus lockdown

The FTSE 100 was tipped to stumble on Tuesday after Downing Street imposed a new tougher national coronavirus (COVID-19) lockdown overnight.

London’s blue-chip share index was being called down 21 points by spread-betters in the City a day after making gains of just over 111 points or 1.7% to 6,571.88 on the first trading session of 2021.

On Monday evening, UK prime minister Boris Johnson said England will enter its third national lockdown until at least February 22, 2021, with households ordered to stay home for everything but daily exercise once a day and with all non-essential shops closed.

“The weeks ahead will be the hardest yet,” the prime minister said, as the moves were brought in to prevent the NHS from becoming overwhelmed amid rocketing numbers of Covid-19 cases in the country since last month.

With the pandemic resurgent in many other countries too, financial markets have been wobbly, with US share indices bathed in red overnight and Asian stocks mixed on Tuesday.

On Wall Street, the Dow Jones Industrials Average, S&P 500 index, ad Nasdaq Composite all retreated from their recent record highs, down 1.3%, 1.5% and 1.5% respectively ahead of an important pair of run-off Senate elections in the state of Georgia.

“With the world long to the eyeballs on the global recovery trade across multiple asset classes, uncertainty in the Georgia election today could create a fertile breeding ground for some emotional pullbacks,” said market analyst Jeffrey Halley.

“I expect European equities to open lower with that in mind, with UK markets under greater than average pressure due to the imposition of a new national lockdown. With positioning so heavily weighted to the long side, equity markets could potentially correct much lower if the Georgia election results are delayed, inconclusive or if the Democrats sweep both seats.”

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