Financial markets latest: FTSE flat as local Covid lockdowns loom

New Covid restrictions will impact the FTSE 100
The FTSE struggled to make any headway on Monday morning

The FTSE 100 made a slow start to the week amid concern over Covid outbreaks and the economic impact of lockdown restrictions. Tradefair brings you the latest financial market news...

"The major issue here is to focus on the cities and areas with the largest outbreaks."

- Calum Semple, SAGE member

London's FTSE 100 dropped into the red in the first few hours of trading on Monday (October 12) as investors awaited a government announcement regarding new local lockdown rules for England.

Boris Johnson is due to give a press conference at Downing Street at 18:00 BST today, where he will announce the latest restrictions designed to combat regional outbreaks of Covid-19.

The coming week is also expected to prove significant with regards to Brexit, as negotiators from London and Brussels continue negotiations on a permanent trade deal between the UK and the EU.

'Necessary' restrictions

The new rules for England are expected to come in the form of a three-tier system, which will classify particular regions as being on 'medium', 'high' or 'very high' alert, based on the current perceived threat of local coronavirus outbreaks.

Liverpool and the surrounding city region, which comprises local authority districts including St Helens and Wirral, is set to face some of the tightest restrictions. The area recorded 600 Covid cases per 100,000 people in the week ending October 6, compared to an average of 74 across England as a whole.

The new rules are expected to affect local businesses including pubs, casinos and gyms.

Discussing the thinking behind the changes, Calum Semple, professor of outbreak medicine at the University of Liverpool and a member of the Scientific Advisory Group for Emergencies, told BBC Breakfast: "Most of the outbreaks are happening within and between households and then after that, it's in the retail and hospitality sector.

"So, the major issue here is to focus on the cities and areas with the largest outbreaks and sadly my home city of Liverpool is being hammered at the moment. These restrictions are necessary."

There has been widespread concern, particularly in the north of England, about the economic and financial impact of local lockdown rules.

Steve Rotherham, the mayor of the Liverpool metropolitan region, has called for government support for the area and businesses that are forced to close.

FTSE struggles

Greater Manchester mayor Andy Burnham joined other northern leaders in a joint press conference on Saturday afternoon, where he called for a parliamentary challenge against the new lockdown rules.

Burnham said he would also consider taking legal action against the measures, which he warned could have major long-term economic consequences for cities and communities in the north.

Amid this ongoing economic and political uncertainty, the FTSE 100 struggled to make any headway on Monday.

London's blue chip index initially fell by 0.3%, before rallying slightly to end the morning session largely flat.

Other European indices had better fortunes at the start of the week, with Germany's DAX index rising by up to 0.6% on Monday morning and France's CAC 40 gaining 0.5%.

Market trends during the week to come will also be influenced by developments in the final phase of post-Brexit trade negotiations. There have been signs of progress in the talks in recent weeks, but there are still hurdles to overcome in areas such as fishing quotas.

Johnson spoke to Emmanuel Macron over the weekend and told the French president he wanted to "explore every avenue" to secure a permanent trade deal. He also stressed the need for "intensive talks" to "bridge significant gaps" that remain between the two sides.

The UK prime minister previously earmarked the European Council summit on October 15 as the deadline for a deal to be finalised, but the EU's chief Brexit negotiator, Michel Barnier, has reportedly said discussions could continue beyond this date.

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