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, says Russ Mould, investment director at AJ Bell.
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. Among the biggest negative contributors to the index in points terms were ITV, Howden Joinery and Games Workshop, all linked to consumer spending either directly or through advertising.
Both Next and Primark owner Associated British Foods saw their share prices fall by approximately 1% as markets opened on Monday, with investors disappointed that non-essential retail may not reopen until at least late April, based on media reports.
“That’s a blow to Associated British Foods which doesn’t have the online channel to keep sales coming in for Primark. Fortunately, its conglomerate status provides welcome diversification benefits, with money still being made in food and ingredients during lockdown.
“Restaurants are not expected to open until May, but pub gardens could be busy again from mid-April, giving some hope to investors who bid up shares in Wetherspoon.
“Missing the Easter weekend will be a major blow for the pubs industry as that is traditionally a strong period for trading. And until pubs are permitted to open, each day of sunshine will be like pushing a thorn deeper into a wound for pubs operators as their tills sit idle.
“Despite some disappointment at the likely pace of reopening for different industry sectors, we may only be talking a matter of months and investors should really be looking much further into the future.
“Investor sentiment should improve once the first lockdown restrictions start to be eased and that’s also the case for companies as well. You should expect to see a pick-up in recruitment for sectors that have sailed through the crisis such as technology and healthcare.”