Leisure and hospitality shares hit by fears of a second wave of coronavirus

London’s benchmark FTSE 100 share index fell by more than 3% in trading this morning as Chief Scientific Officer Patrick Vallance warned that new Covid-19 infections could hit 50,000 a day by October unless decisive action is taken now.

Already beleaguered airlines, travel companies, hotel and pub groups led the fall on fears of a second lockdown, with British Airways owner IAG, which slumped more than 12%, the hardest hit.

Leading shares across Europe fell in morning trading amid fears that a renewed rise in coronavirus cases will blight economic prospects; Paris, Frankfurt and Madrid all fell by a similar amount.

Banking shares also fell, as leaked secret files added a money-laundering scandal to the current list of woes weighing heavily on the economy; HSBC, the bank at the centre of the scandal, fell more than 5% in London, but the revelations dragged down the entire sector, with Barclays, Lloyds and NatWest all down around 6%.

All but a handful of stocks on the UK’s 100-share index were affected with only online delivery service Just Eat, supermarkets Tesco and Ocado and miner Fresnillo making it into positive territory.

Generally seen as a better reflection of the health of the UK economy, the FTSE 250 index shed 4% by lunchtime; biggest faller was pub and restaurant owner Mitchells & Butlers, which dropped more than 13% as concerns grow that the already fragile hospitality industry has the most to lose from a fresh lockdown.

The pound also lost ground against the dollar, falling 0.58% to $1.2848. It fell marginally against the euro to €1.0902.

Coronavirus cases have been surging in many European countries, as governments strive to avoid another round of national lockdowns; the UK’s top scientists have warned that the country is at a ‘critical point’ in the pandemic and ‘heading in the wrong direction’.

Desperate to avoid a second national lockdown, Boris Johnson is understood to be considering a two-week mini-lockdown in England – a ‘circuit-breaker’ – in an effort to stem the growth of the virus; other measures such as an evening curfew could hit restaurants that were recently buoyed by the Chancellor’s ‘Eat out to Help’ out initiative.

Although markets across Europe have been affected, there are particularly serious concerns for sectors of the UK economy such as aviation and hospitality that have already faced massive disruption; those fears could be existential for some in the event of a second lockdown and with the looming presence of Brexit.