FTSE 100 sees £33bn wiped off over fears of Covid and no-deal Brexit

The FTSE 100 fell 2 per cent within minutes of opening as UK stock markets began the day with news of a deepening crisis at key ports through which fresh food and other vital products are supplied.

In London, £33bn was wiped off the index of the 100 leading companies’ shares on Monday morning, while the pound tumbled almost 2 per cent against the dollar after France closed the border to all accompanied freight.

The announcement from Paris came in response to warnings over a new variant of Covid-19 — thought to be more transmissible — that is spreading rapidly in the southeast of England. France’s move caused the Eurotunnel and Dover ferry port to close for 48 hours from Sunday night.

Share prices are suffering in part because of fears that harsher lockdown measures will be needed for months if the new coronavirus variant is confirmed as spreading more easily than previous strains.

The owner of British Airways, International Consolidated Airlines Group, was the biggest faller, down 16 per cent, while Lloyds Banking Group dropped 6 per cent.

The FTSE 250 was down 1.8 per cent to 19,753 in early trading. Against the dollar, the pound was down 1.8 per cent at $1.327; against the euro, the pound was down 1.5 per cent to €1.086.

Olivier Konzeoue, a trader at Saxo Markets, said the pound would remain volatile in the coming days as currency markets follow news on Brexit coming out of Brussels. 

“A new strain of Covid-19 deemed to be 70 per cent more contagious, pushing the UK government to put new lockdown measures in place, combined with stalling Brexit talks, make for a rather toxic mix that weighs on the pound,” he said.

“Markets are not positioned for a cliff-edge breakup between the UK and EU. No doubt, headline risks will keep sterling under pressure in the coming days.”

While the UK-France border remains open in one direction, allowing goods to leave the UK, food and logistics industry figures warned that the flow of lorries could stop because drivers cannot go back the other way and will fear being stranded over Christmas and beyond.

Miles-long queues of lorries bound for France had already formed last week on motorways leading to the Eurotunnel in Kent as companies stockpiled ahead of the end of the Brexit transition period.

Tailbacks are expected to grow longer on Monday as the gridlock intensifies. On Sunday night, Kent police began implementing Operation Stack, a plan for lorries to park up along the M20 at times when trade across the Channel is disrupted.

Ian Wright, chief executive of the Food and Drink Federation, said France’s travel ban could cause “serious disruption to UK Christmas fresh food supplies – and exports of UK food and drink”. 

“Continental truckers will not want to travel here if they have a real fear of getting marooned. The [British] government must very urgently persuade the French government to exempt accompanied freight from its ban,” he added.

Grant Shapps, the transport secretary, attempted to quell fears about the disruption, pointing out that while about 6,000 lorries would not move across the Channel on Monday, 32,000 containers would still make the journey. 

“Quite often you get disruption on this short route. You just don't notice it,” the minister said.

“In the very short term, over the next day or two, this does not have a particularly big impact.”

Trade bodies for the logistics industry urged shoppers not to panic buy and sought to provide reassurance that shelves would remain stocked. Shane Brennan, chief executive of the Cold Chain Federation, which represents food storage and transport companies, called on the government to swiftly resolve the crisis and ensure the welfare of hundreds of drivers who may be stranded on the roads.

He said: “This will cause them, their families, and their employers great anxiety as they will have no idea when or how they will get home. We urge the authorities on all sides to consider their welfare above all else in the hours ahead.

“We must also remember that the UK has a resilient and diverse food-supply chain; we are operating at our peak trading period with well-stocked supermarkets and supply chains full of all the products people need for Christmas. We urge consumers to trust in the professionals working across the cold chain to do their job.”

The British Retail Consortium and freight industry trade body Logistics UK also said there were no immediate concerns about shortages but both urged the government to work to reopen trade routes. 

Boris Johnson is to chair a meeting of the government’s emergency Cobra civil contingencies committee on Monday to address the “the steady flow of freight into and out of the UK”, a No 10 spokesperson said.