Freedom Day is no party for the UK stock market

“There is no ticker tape parade, cheers from the rooftops or people dancing in the streets as Freedom Day finally comes,” says Russ Mould, Investment Director at AJ Bell.

“The UK stock market is certainly not in a celebrating mood.

“Many of the stocks leading the UK stock market downwards are related to travel and leisure, suggesting that investors are extremely worried that we’ve lifted restrictions too soon and that another lockdown could be a month or two round the corner.

“Covid is spreading fast again and the airlines, restaurants and leisure companies may not get the strong summer trading they’ve long hoped for. The fact Cineworld is down 8%, Carnival falling 7% and Restaurant Group 4% implies that investors think the reopening trade is now a dud.

“Lots of people have been vaccinated and assumed they had become invincible. Reality is now striking as many of these individuals get a wake-up call by catching Covid or being pinged and told to isolate.

“Pictures from UK airports would suggest some increase in flying but certainly nowhere near the levels one might have expected a few months ago. Then, everyone was talking about their big plans to celebrate once Freedom Day came around, and now it’s proved to be a damp squib.

“The big concern for the market is whether we going to see a slowdown in the global economic recovery, and this could be the overriding force which results in a bad period for equities in the weeks ahead.

“An agreement by OPEC+ to boost output has triggered a decline in oil prices, which provides some relief to companies and consumers and reduces inflationary pressures by a small amount. However, it may not be enough to offset the economic fears.

“Elsewhere on the markets, Ocado’s shares fell 2.6% after the grocery group suffered yet another fire caused by its robots. This has disrupted trading for its UK operations but perhaps is more damaging to its reputation, as it is trying to convince grocery providers around the world to sign up to its technology platform.

“One has to wonder if the food sector is jinxed. First, we had Deliveroo’s shares struggle when it joined the stock market earlier this year, now we’ve got another new market entrant failing to live up to the hype.

“Parsley Box’s proposition may have appealed to people stuck indoors during lockdown, but now it is finding new customer recruitment harder as Covid restrictions are eased.

“That’s led to analysts slashing their earnings forecasts and the shares trading 25% below the price at which they joined the market in March. If people are able and confident enough to get out and about, why use someone like Parsley Box when mainstream supermarkets offer plenty of choice at arguably cheaper prices?”

These articles are for information purposes only and are not a personal recommendation or advice.