Fear of the new coronavirus outbreak forces renewed lockdowns in England and Scotland

January 05, 2021 14:00

Since the end of last December, a new strain of was coronavirus identified in the United Kingdom. The British Premier estimates a higher contagion rate between 50% and 70% higher, creating fears of a third wave after the Christmas holidays.

This new strain caused the closure of UK borders at the end of last month, trapping thousands of people now unable to leave the country. It also seriously affected the transport sector, since the English Channel tunnel was closed on the French side, so thousands of truckers were trapped in kilometre-long queues in the days prior to the UK's final exit from the European Union.

The pandemic remains uncontrolled, and this has led to the decision to order renewed lockdowns in both England and Scotland, being the most strict since March of 2020. This includes the closure of schools, bars, and any non-essential trade from today until mid-February due to the high rate of infections exceeding 50,000 daily cases.

Due to increased uncertainty about recovery in the short and medium-term, and the fear that other countries will decide to take the same measure, the tourism sector, particularly airlines, fell sharply in the stock markets.

In the case of companies which make up IAG, including companies such as British Airways and Iberia, we saw a decrease yesterday of 7.26%, further creating pressure on the already suffering stocks during the last few months.

This decrease has caused this company to lose the opportunity to try to reach the upper band of the lateral channel (in green) that it had been following during the last few days, instead, attacking the level close to 190.00 GBX and thus closing the strong bearish gap after the capital increase last September, leading the price to lose the red band of the side channel and to fight with its average of 200 in H4.

Source: IAG H4 chart of Admiral Markets MetaTrader 5 Supreme Edition platform (from July 28, 2020 to January 5, 2021). Done on January 5, 2021. Note: Past performance is not a reliable indicator of future results, or future performance.

 

These decreases were not only produced in this company after yesterday's announcement, since companies such as Lufthansa or Air France KLM also made decreases during the day yesterday of 6.29% and 4.88% respectively. In 2016, IAG fell by 38.01%, in 2017 it increased by 41.08%, in 2018 it decreased by 4.37%, in 2019 it rose by 4.40% and in 2020 it lost 62.54%.

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