European stock markets fell into the red on Thursday after reports that UK ministers were considering delaying the final stage of Britain's reopening by two weeks.
In London, the FTSE 100 (^FTSE) tumbled as much as 1.3% to its lowest level in a week before paring back some losses. The index, which closed 0.6% down, was held back by a stronger pound as well as reopening concerns.
Britain is due to end all restrictions on 21 June in the final stage of a reopening plan that began in earnest in April. The Financial Times reported that a fallback plan was being discussed by British ministers in case hospitalisations and deaths increase.
Although almost 40 million people in the UK have received a first dose of the COVID-19 vaccine, the country is still struggling with the spread of the Delta variant, which was first identified in India. There are concerns that the rapid spread of the new variant could still overwhelm hospitals and questions remain about the efficacy of vaccines on the new strain.
Prime minister Boris Johnson remains upbeat about easing restrictions in England on 21 June. One senior minister told the FT: “He’ll move heaven and earth for June 21.”
“I can see nothing in the data at the moment that means we can’t go ahead with step four, or the opening up on June 21, but we’ve got to be so cautious,” Johnson said on Wednesday.
“What we need to work out is to what extent the vaccination programme has protected enough of us, particularly the elderly and vulnerable against a new surge and, there, I’m afraid the data is still ambiguous.”
Travel stocks came under pressure as UK officials reviewed their traffic light system for international travel. British Airways owner IAG (IAG.L) fell 5%, while Wizz Air Holdings (WIZZ.L) was down 3.8% and Ryanair (RYA.L) lost 4.6%. Budget airline EasyJet (EZJ.L) also slumped 5% on Thursday after it was also hit by a series of cancellations that sparked a wave of complaints among travellers.
London-based real estate agent Foxtons Group (FOXT.L) rose 1.4% as it revealed it expects first-half profits to exceed pre-pandemic levels.
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"It all just feels a bit deflated right now," IG analyst Chris Beauchamp told AFP. "The week has been almost empty of news and so we have seen a bit of a momentum escape from markets."
Across the pond, the S&P 500 (^GSPC) dipped 0.3% by the time of the European close, and the Dow Jones (^DJI) was flat. The tech-heavy Nasdaq (^IXIC) fell 1%. Fresh jobs data revived concerns among investors about the possibility of the Fed tightening its monetary policy.
On Thursday, data showed US private sector payrolls rose 978,000 last month, beating forecasts. It was the strongest reading since June last year, when the US economy was recovering from the first wave of COVID-19. Thursday's report represented a fifth straight month of net private payroll gains.
Elsewhere, new jobless claims in the US fell below 400,000 for the first time since the start of the pandemic, bringing new filings within striking distance of their pre-pandemic weekly rate. New claims were averaging just over 200,000 per week throughout 2019.
During the week ending 15 May, the number of Americans claiming benefits across all unemployment programs totalled 15.4 million, dipping by about 366,000 from the prior week. During the comparable week last year, total claimants came in at 30.8 million.
Most Asian stocks climbed on Thursday, weathering the latest twist in US-China relations and Federal Reserve comments on a potential reduction in stimulus.
Bloomberg reported that president Joe Biden will amend a US ban on investments in companies linked to China’s military this week. Under the new proposals, the Treasury Department will create a list of companies that could face financial penalties for their connection to China’s defense and surveillance technology sectors. The Treasury would take over the role from a congressionally-mandated Defense Department report.
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