The FTSE 100 marked the one-year anniversary of the first Covid lockdown in suitably downbeat fashion, says AJ Bell investment director Russ Mould.
“The ongoing impact of restrictions, particularly on the travel sector, play a part as a ban on going on holiday abroad is extended with new, more severe penalties for flouting the rules.
“Unsurprisingly the likes of EasyJet and Jet2 suffer further falls today after slumping yesterday on hints that a week in the sun abroad was looking unlikely thanks to surging cases in mainland Europe.
“Even if the curbs are relaxed at a scheduled review next month, people may not be encouraged by these latest developments to book a break.
“At least the index as a whole is in a happier place than it was 12 months ago when it traded below the 5,000 mark amid concern about the impact of Covid on the economy.
“The sustained recovery from those lows has been supported by the rapid development and, in some cases, rollout of vaccines, with the markets continuing for the most part to look forward to recovery – even if inflation risks have added some clouds to the outlook.
“However, warnings from Angela Merkel that Germany is effectively in a new pandemic thanks to the impact of new variants are a reminder that the crisis is not over yet.
“There were also echoes of the US-China spat which had a big impact on investor sentiment pre-Covid as new sanctions were imposed by the US and its allies the EU, UK and Canada in response to Chinese treatment of Uighur Muslims in its Xinjang province, with Beijing responding in kind.”