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(Alliance News) - Stock prices in London were lower at midday on Friday as uncertainty surrounding AstraZeneca's coronavirus vaccine compounds concerns about draconian restrictions on activity set to go into place across the UK, while markets in the US return for a half-day.
Under new rules set out by the UK government on Thursday, more than 55 million people will be placed into Tier 2 and Tier 3 measures when the second national lockdown ends next week, meaning mixing between households indoors will effectively be banned for the vast majority of the country.
The FTSE 100 index was down 19.96 points, or 0.3%, at 6,342.97. The large-cap index is still on track to end the week up 0.1%.
The mid-cap FTSE 250 index was down 164.43 points, or 0.8%, at 19,231.91. The AIM All-Share index was flat at 1,039.29.
The Cboe UK 100 index was down 0.3% at 631.51. The Cboe 250 was down 1.0% at 16570.62. The Cboe Small Companies down 0.4% at 11,404.50.
UK stocks were underperforming those in in mainland Europe. The CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.5% and 0.3% respectively.
"One would have thought the lifting of the month-long lockdown would have given a boost to investor sentiment; yet we're rounding off a week where markets ground to a halt. The FTSE 250 was always going to be more sensitive to developments with business and society restrictions as it has a greater amount of UK-focused companies than the FTSE 100," said AJ Bell's Russ Mould.
The AstraZeneca and Oxford University vaccine will undergo a new global trial as critics questioned the claim that it could protect up to 90% of people against coronavirus.
"Now that we've found what looks like a better efficacy we have to validate this, so we need to do an additional study," Chief Executive Pascal Soriot told Bloomberg in an interview.
AstraZeneca shares were down 0.5%.
The UK government said on Friday it has asked its independent medicines regulator to assess AstraZeneca's coronavirus vaccine as part of the formal approval process for the drug to be rolled out by the end of the year.
More than 1.4 million people have died since the novel coronavirus emerged in China late last year, and three drug developers - Pfizer/BioNTech, Moderna and AstraZeneca/Oxford University - are currently applying for approval for their vaccines to be used as early as December.
But under UK rules, the government must also ask the independent Medicines & Healthcare products Regulatory Agency to green light the drug.
"We have formally asked the regulator to assess the Oxford/AstraZeneca vaccine, to understand the data and determine whether it meets rigorous safety standards," said UK Health Secretary Matt Hancock.
The UK government has already formally asked the MHRA to assess the Pfizer/BioNTech vaccine for its suitability.
"Vaccine optimism seen at the start of the week has completely fizzled now that questions are growing over the soundness of the AstraZeneca covid vaccine trial. The doubts could delay the cheap and easily transported vaccine from being approved quickly by regulators," said City Index's Fiona Cincotta.
In the FTSE 100, Diageo was up 0.7%, after Morgan Stanley upgraded the distiller to Overweight from Equal Weight.
At the other end of the large caps, Homeserve was down 4.5%. The home emergency cover provider finds itself on the brink of automatic demotion from the large-cap index ahead of the FTSE Russell index review changes next week. Homeserve currently ranks 115th in the FTSE 350 by market capitalisation, just below the safety threshold of 110th place, with a total market value of GBP3.4 billion.
In the FTSE 250, Indivior was the worst performer, down 45% after the drugmaker said Reckitt Benckiser has submitted a GBP1.07 billion claim to the Commercial Court in London, pursuant to an indemnity from the demerger of Indivior from Reckitt in 2014. Reckitt shares were down 1.0%.
JD Wetherspoon was down 1.5%. The pub chain complained bitterly about the UK government's post-lockdown tier system, which effectively forces almost half of its about 870 pubs to close.
Just 13 Wetherspoon pubs in England are in areas classified as Tier 1, under the new UK virus restrictions that go into place from next week. In addition, there are 51 pubs in Wales, where the regulations equate to Tier 1 in England.
In Tier 1, the rule of six applies indoors and outdoors, but in Tier 2 there will be a ban on households mixing indoors, and pubs and restaurants will only be able to sell alcohol with a "substantial meal". Tier 3 measures mean a ban on households mixing, except in limited circumstances such as in parks.
For Wetherspoon, Tier 2 affects 435 pubs. This tier includes 17 pubs in Scotland where the regulations approximate to Tier 2 in England, the pub chain said.
"These rules greatly reduced pub capacity and provided strict social distancing and hygiene standards but, with difficultly, allowed pubs to trade viably. It is very disappointing that yet another raft of regulations has been introduced, which has effectively closed half our pubs," said Chair Tim Martin.
The pound was quoted at USD1.3330 on Friday at midday, flat from USD1.3333 at the London equities close Thursday, as high-level, in-person Brexit talks get set to resume in London.
The European Union's chief negotiator Michel Barnier warned ahead of a meeting with his UK counterpart, David Frost, that "significant divergences" still remain.
Face-to-face negotiations in Brussels were suspended a week ago after a member of Barnier's team contracted coronavirus. But Barnier has now said "physical negotiations" can resume. He is briefing EU member states ahead of talks with Lord Frost as areas such as fishing rights remain major obstacles to a deal before the Brexit transition period expires at the end of next month.
"Michel Barnier is heading to London in a bid to help break the deadlock in Brexit talks today, with just five-weeks to overcome a seemingly insurmountable fish-shaped wall in negotiations. Unfortunately, the evident desire to reach a deal from both sides has not been matched by a willingness to compromise, and thus there is little to indicate we will overcome the final hurdles," said IG Group's Josh Mahony.
Financial markets in the US will reopen for a half-day on Friday after being closed on Thursday for Thanksgiving.
US stock market futures were pointed to a higher open, with the Dow Jones Industrial Average called up 0.1%, the S&P 500 up 0.2% and the Nasdaq Composite up 0.4%.
Worries about US political uncertainty eased after Joe Biden's election win and President Donald Trump's announcement Thursday that while he thinks the vote was rigged, he would step aside if the Electoral College hands him defeat next month.
"It is now beyond any reasonable doubt that President-Elect Joe Biden will be sworn-in on January 20. The new administration has ambitious stimulus plans for the US economy and the first year of the incoming president's mandate is likely to be marked by a coordination of market-friendly fiscal and monetary stimulus, which is likely to keep the greenback under pressure," said analysts at ActivTrades.
The euro stood at USD1.1930, up from USD1.1908. Against the Japanese yen, the dollar was trading at JPY104.09, down from JPY104.27.
Brent oil was trading at USD48.12 a barrel Friday midday, up from USD47.77 late Thursday. Gold fetched USD1,809.21 an ounce, slightly lower from USD1,810.32.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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