Markets hold up well despite new lockdown restrictions but losers

Stock markets held up well on Tuesday despite the UK entering its third national lockdown as the closures of various industries had already been priced-in by investors.

Several UK focused businesses saw their shares sell-off at the start of the week in anticipation of what Prime Minister Boris Johnson would announce, but stock movements revealed some surprises.

READ: UK announces £4.6bn support to businesses after entering new lockdown

“Given the severity of the lockdown restrictions announced by the Prime Minister, one might have expected a repeat of last year’s trends with lockdown losers slumping on the stock market and beneficiaries rallying. That’s not entirely the case this time round,” said Russ Mould, investment director at AJ Bell.

In fact, tour operator TUI (), baker Greggs () and pubs group () were in the green, despite being in the sectors with most to lose from widespread closures.

The FTSE 250 index was given a boost after Chancellor Rishi Sunak announced £4.6bn in support for businesses in retail, hospitality and leisure, although it swiftly trimmed its gains over the afternoon.

Stock movements aside, companies in these sectors are expected to be once again the losers of the first quarter of the new year.

Among the big fallers so far this week, airlines like EasyJet (), entertainment venue operators such as Rank (), along with pub companies including () and (), though some shares were already bouncing back on Tuesday.

“With the vaccines being rolled out, a lot of investors are continuing to ignore the short-term impact of the latest lockdowns, and look forward to more normal times ahead,” said market analyst Fawad Razaqzada at ThinkMarkets, with the Chancellor’s new measures also providing fuel.

For the UK’s food system, the Shore Cap analysts reckon that the continued working-from-home practices will boost suburban food systems and curtails those if central business districts and travel hubs, so companies such as Upper Crust owner SSP Group () will take another substantial hit.

The food & beverage channel will see “devastation” following ten months of struggle plus a wipe-out Christmas, with hospitality players exposed to central business districts and travel hubs are especially negatively impacted, while community-based operators are expected to be the first and greatest to benefit.

Companies are expected to cut costs and issue more cash calls to survive.

Meanwhile, the British grocery retail sector will see continued strong demand, with larger baskets and fewer transactions persisting and online dominating.

Sainsbury’s (), Tesco (), Morrisons () and Ocado () are set to continue to thrive, while in the supply chain the likes of Cranswick (), Hilton Food Group () and Premier Foods () will remain busy.

In the transport sector, analysts at Liberum said the third lockdown will have similar implications to the second, with passenger transport volumes likely to decline to lesser degree than in…