Concerns over looming circuit breaker lockdown to weigh on London markets this week

Concerns over whether the UK is heading for a pre-Christmas circuit breaker lockdown are likely to loom over investors this week.

Ministers are reportedly drawing up plans to saddle Britain with tighter restrictions on socialising and household mixing to curb the rapid spread of Omicron.

Health secretary Sajid Javid yesterday refused to rule out imposing further measures before Christmas.

A ratcheting up of measures would likely hit consumer-facing firms listed on London’s premier FTSE 100 index and deal a blow to market sentiment.

The FTSE 100 is already on shaky ground, closing down 0.30 per cent last week. Meanwhile, the mid-cap FTSE 250 index, which is more aligned to the health of the UK economy, lost over 0.60 per cent last week.

Markets are also coming to terms with the Bank of England tilting toward hawkish policy after it last week became the first major central bank to hike interest rates since the onset of the pandemic.

Tighter policy tends to knock stocks by squeezing the amount of capital available for investors to deploy in equity markets.

Analysts at Bank of America now expect the Bank to hike rates again in February and November 2022.

Economic data is light on the final week before the City wraps up for the Christmas break.

Public finance figures for November are released on Tuesday and borrowing is expected to come in high, driven by elevated welfare spending. Final third quarter GDP readings are also out on the same day.

Lloyds’ business barometer and the Confederation of British Industry’s selling price index are out tomorrow and Tuesday respectively.

“On all fronts, we’re expecting some easing in light of Omicron,” said Sanjay Raja, chief UK economist at Deutsche Bank.