UK stocks remained cautious on Monday as prime minister Boris Johnson outlined a roadmap out of England's third national lockdown.
The pound (GBPUSD=X) hovered at $1.40 after the announcement, little changed from earlier in the day. The currency topped the threshold for the first time since April 2018 on Friday, and is currently the best-performing major global currency so far this year.
The PM announced a four-step plan to gradually reopen the UK economy, with schools set to reopen across the country from 8 March.
He said the move to begin "cautiously but irreversibly" easing restrictions comes as the UK vaccine rollout gathers pace. All curbs will potentially be lifted by late June.
Non-essential shops, including hairdressers and nail salons, outdoor attractions such as zoos and theme parks, and also indoor gyms and swimming pools, and hospitality for outdoor service, will reopen on 12 April. Self-catered holiday accommodation would also open at this point.
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“It looks like the roadmap for easing lockdown restrictions is set to cause some disappointment in the world of business and that’s reflected in share price behaviour ahead of the prime minister’s speech,” Russ Mould, investment director at AJ Bell, said.
“The UK-focused FTSE 250 index slipped 1% as investors took the view that the UK economy would only be unlocked gradually rather than a quick flick of the switch."
Retailer JD Sports (JD.L) lost 1.2% on the back of the news and Games Workshop (GAW.L) shed 1.06%, while property listings site Rightmove (RMV.L) shed 2.88% and housebuilder Persimmon (PSN.L) dipped 0.18%.
Across the pond, the S&P 500 (^GSPC) dipped 0.51% at the European close and the tech-heavy Nasdaq (^IXIC) fell 1.6%, joining a broad global sell-off. The Dow Jones (^DJI) edged 0.06% higher after hitting record highs last week.
Technology stocks are also seeing some weakness today against a backdrop of possible antitrust investigations after the UK’s CMA warned it would be conducting a series of probes into the likes of Amazon (AMZN) and Google (GOOG) in the months ahead.
Richard Hunter of Interactive Investor said: “The proposed stimulus package in the US, accelerating vaccine rollouts and surging commodity prices each contribute to the anticipation of economic relief.
“In the US, there has been a small but noticeable rotation out of strong growth stocks such as tech into those which would be immediate beneficiaries of any return to normality. The industrial and material sectors in particular are pricing in strengthening demand as cyclical shares begin to show signs of coming back into fashion.”
A gauge of Asian stocks also edged lower overnight, erasing earlier gains amid a surge in metals that could fan price pressures. Japanese shares outperformed, with the Nikkei (^N225) climbing 0.46% while other key markets lagged.
Meanwhile, copper (HG=F) hit its highest level in more than nine years in a sign of optimism about a global economic recovery. Brent crude oil (BZ=F) also climbed past $63 a barrel as the market assessed the fallout from the big freeze across Texas and crimped supply.
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