Interactive Investor

Boris’s Plan B is bad news for these stocks

9th December 2021 13:15

Graeme Evans from interactive investor

New Covid restrictions, which come into force on Monday, will have a detrimental effect on a range of companies. Disruption is being reflected in share prices today.

Stock market losers following Boris Johnson's Plan B announcement go beyond the leisure sector after another setback to the recovery hopes of Lloyds Banking Group (LSE:LLOY) investors.

Lloyds shares fell 1% as the work-from-home order prompted financial markets to put back expectations for a margins-enhancing rise in interest rates from next week to February.

It's the second time in as many months that borrowing costs have come back from the brink after the Bank of England spurned the chance to raise rates from 0.1% in November.

The Bank's wait-and-see approach is set to continue until more is known about the severity of the Omicron variant and the impact of the latest social restrictions.

The Christmas disruption means further sideways movement for Lloyds shares, particularly given the bank's fortunes are so closely tied to that of the UK economy.

As we've written in recent weeks, plenty of City analysts believe Lloyds shares have the potential to be trading above 60p once rates start rising from their emergency low.

But the widely held stock is today stuck in a familiar position around the 47p mark, albeit better than the 33p seen at the start of this year. NatWest (LSE:NWG), which is regarded as the most rates sensitive of the UK banks, fell by 1.1p to 220.5p and Barclays (LSE:BARC) dipped 1.8p to 184.12p.

February's full-year results season is the next key date for the sector amid expectations for increased capital returns as long as the economic conditions are favourable.

The wider FTSE 100 index continues to reflect optimism that Omicron won't derail the global economy recovery, despite the new variant being more transmissible than the Delta one.

Those hopes were fuelled yesterday by comments from Pfizer (NYSE:PFE) that the protection offered by a booster dose of its vaccine should be effective against Omicron.

While the FTSE 100 has consolidated its position above where it was prior to the Black Friday sell-off, there have been signs of jitters after today's fall of 0.2%. This came despite pressure on the pound helping many of the stocks with overseas earnings in the top flight.

British Airways owner IAG (LSE:IAG) was one of the biggest fallers, declining 3.4p to 139.1p to leave shares stuck between the 154.3p seen before the Omicron sell-off and last week's low point of 127.45p. It was a similar story for easyJet (LSE:EZJ) and Wizz Air (LSE:WIZZ) after their shares fell 3%.

Restaurant Group (LSE:RTN), which trades as Wagamama and Frankie's & Benny's, dropped 5.4p to 85.5p on fears that working from home and a general reluctance for families to go out will have a big impact on Christmas revenues. Cineworld (LSE:CINE) also dropped 2% to just above 50p.

Among other stocks at the forefront of the so-called re-opening trade, pubs chain Mitchells & Butlers (LSE:MAB) fell 3p to 232.4p and J D Wetherspoon (LSE:JDW) dipped 2% to erase gains seen since Monday.

Primark's lack of online presence also hurt Associated British Foods (LSE:ABF) as expectations for quieter high streets in the run-up to Christmas sent shares 31p lower to 1913.5p.

Two companies whose shares performed well during previous Covid-19 restrictions featured on the FTSE 100 risers board. They included packaging group DS Smith (LSE:SMDS), whose shares rose 2% after interim results revealed more strong demand as shopping habits increasingly shift online.

First-half profits jumped 80% to £175 million amid continued strong demand from the fast-moving consumer goods sector, with optimism for the second half prompting the company to declare a 20% higher dividend at 4.8p a share for payment on 3 May.

Shares in B&M European Value Retail (LSE:BME) are also near a fresh record, lifting 2% or 10.8p to 640.6p after it declared a special dividend of 25p a share worth £250 million in total. The payment is due on 14 January and comes on top of last month's 16.3% hike in the interim dividend to 5p a share, which due to be paid on 17 December.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.