Stocks fall as UK quarantines travellers and France lockdown speculation grows

Tom Belger
·Finance and policy reporter
·3 min read
British Prime Minister Boris Johnson leaves 10 Downing Street in London, England. Photo: Dan Kitwood/Getty
British Prime Minister Boris Johnson leaves 10 Downing Street in London, England. Photo: Dan Kitwood/Getty

European markets tumbled on Wednesday, with renewed alarm over COVID-19 cases and restrictions weighing on stocks.

In the UK, prime minister Boris Johnson announced in parliament on Wednesday that arrivals from 22 countries would be forced to quarantine in government-provided hotels. He also repeated warnings not to travel abroad, warning people would be sent home at airports if found without valid reasons for travel.

It comes after Britain’s official death toll from the coronavirus passed 100,000 on Tuesday, the world’s fifth highest and more than the civilian casualties in the Second World War.

The FTSE 100 (^FTSE) and the continent-wide Stoxx 600 (^STOXX) sank 1.5%, the CAC 40 (^FCHI) shed 1.7% and the DAX (^GDAXI) shed 2% by mid-afternoon.

Banks, travel, leisure and energy stocks, among the most exposed to the pandemic and government restrictions, were among the biggest fallers on the markets in London and across Europe.

Speculation is also growing of a third nationwide lockdown looming in France, with pressure growing on the government to act as hospitalisations hit an eight-week high on Tuesday.

The government hopes an evening curfew will bring down infection rates, but some expect tougher measures from this weekend.

WATCH: Prime minister Boris Johnson faces questions over UK death toll

German consumer confidence data also came in much worse than expected by analysts on Wednesday, deteriorating to its lowest ebb since last June. An extended lockdown in Europe’s biggest economy and worries over the virus and their incomes weighed on consumers’ morale.

Meanwhile US futures were also trading lower ahead of a US Federal Reserve decision later on Tuesday.

Policymakers expected to hold rates at near-zero. Few changes are expected in its policy statement, with attention likely to be focused on chairman Jerome Powell’s commentary over future asset purchases.

Atlanta Fed president Raphael Bostic “broke ranks” earlier this month by suggesting asset purchases could be tapered off later this year and rates hiked by the end of next year, noted Michael Hewson, chief market analyst at CMC Markets UK.

READ MORE: European stocks rise on Tuesday despite concerns over vaccine rollouts

“Fed officials will need to be very wary of creating a situation where markets start to price in a taper tantrum if the US central bank is seen to be preparing the ground for a potential tightening of monetary policy,” said Hewson.

S&P 500 futures (ES=F) and Dow Jones futures (YM=F) were down 1%, and futures on the tech-heavy Nasdaq (NQ=F) were off 0.7%.

WATCH: The Federal Reserve explained

In Asian markets overnight, Japan’s Nikkei (^N225) rose 0.3%, and China’s Shanghai Composite (000001.SS) rose 0.1%.

But the Hong Kong Hang Seng (^HSI) was down by 1.5%, and the South Korean KOSPI (^KS11) lost 0.6%.

WATCH: What UK government COVID-19 support is available?