European stocks came under pressure on Monday as investors reacted to border closures and new lockdowns as the UK faces an infectious new strain of COVID-19. That overshadowed the news of a stimulus deal in the US and stock futures fell.
The Stoxx Europe 600 index SXXP,
fell more than 3% to 383.23, after a gain of 1.48% last week. The German DAX DAX,
decreased 3.7%, the French CAC 40 PX1,
fell 3.3% and the FTSE 100 index UKX,
decreased 2.7%.
GBPUSD, pound
fell 2.3% to $ 1.3219, while the euro fell 1% to $ 1.2144. The weekend passed with little progress on a post-Brexit trade deal.
The UK announced on Saturday that South East England, including London, would be placed under much tighter restrictions, closing non-essential stores and excluding non-essential travel ahead of Christmas. That’s after the news that a more contagious strain of COVID-19 was responsible for 60% of London infections in December.
Health officials in the UK and the US have said there is no evidence that the new species is more deadly. But the species has been responsible for a big increase in cases in the UK this month.
European countries responded to fears that tension will reach the continent by blocking UK flights and rail travel. There were concerns about possible food shortages as France imposed a 48-hour ban on air, sea and land travel from the UK, including a freight ban.
The UK government will hold an emergency meeting Monday to avoid any food shortages ahead of the holidays. And there were concerns that essential drugs, including the supply of COVID-19 vaccines, could be held up.
Read: Should you be concerned about the new COVID-19 strain? Here’s What You Need to Know
Dow Jones Industrial Average YM00,
slid on 500 points and S&P 500 futures ES00,
2%, while Nasdaq-100 futures NQ00,
decreased 1.6%. The Dow DJIA,
Friday’s session ended 127 points lower due to concerns about passing a stimulus bill.
Fears of new lockdowns entering the first quarter eclipsed the optimism somewhat by news that US lawmakers had agreed to a pandemic relief deal. Senate leader Mitch McConnell said late on Sunday that a bipartisan deal had been reached on a nearly $ 900 billion coronavirus aid package. Lawmakers plan to vote on Monday and pass the bill.
There was also new optimism about COVID-19 vaccines as the biotech Moderna MRNA vaccine,
the second to be authorized in the US began leaving distribution centers on Sunday. Meanwhile, the European drug regulator will decide on Monday whether the COVID-19 vaccine from the American pharmaceutical company Pfizer will give PFE the green light.
and its German partner BioNTech BNTX,
Read: ‘Wear masks when you see family at Christmas’, WHO urges Europeans as regulator speeds up COVID vaccine timeline
Vaccinations in Europe could start within a week if that approval goes through. Pressure on the European Medicines Agency has increased to shorten its approval process amid an increase in coronavirus cases and tougher lockdown measures in the 27-country bloc. The Pfizer BioNTech vaccine is approved in the UK and Canada, as well as the US.
“As the vaccination campaign is likely to take time, investors are concerned about the latest developments, which indicate that the pandemic may get worse before it gets better,” Milan Cutkovic, market analyst at Axi, said in a note to customers.
Concerns about the new COVID-19 strain also weighed heavily on oil prices, with fears that a recovery in demand could face another setback. Crude oil prices in the US and Europe each fell by more than 3%. That hit major oil companies, with shares of Total TOT in France,
a decrease of 3%, and that for BP BP,
BP,
and Royal Dutch Shell RDSA,
RDSA,
in the UK by more than 4% each.
Royal Dutch Shell said on Monday that it expects to book between $ 3.5 billion and $ 4.5 billion in total after tax in the fourth quarter for depreciation, asset restructuring and onerous contracts.
Airlines showed the largest decrease due to UK travel ban disruption. Shares of International Consolidated Airlines IAG,
operating British Airways and other airlines, slipped 10%, Deutsche Lufthansa LHA,
shares fell to 6% and cruise line Carnival CCL,
fell almost 8%.
Shares of low-rate airlines easyJet EZJ,
and Ryanair Holdings RYA,
fell 9% and 5% each.
Shares of the online delivery group Ocado OCDO were on the rise,
about 3%.