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(Alliance News) - Stock prices in London were recovering at midday on Friday from steeper morning losses, as investors balance a surge in coronavirus cases with hopes for a vaccine.
The week started with US pharma company Pfizer and partner Germany's BioNTech announcing promising results in trials of their potential vaccine, showing efficacy of around 90% and sending global markets soaring.
For now though Covid-19 cases remain stubbornly high. On Thursday, 9,921 new deaths and 608,625 new cases were recorded worldwide. The US is the worst-affected country with around 242,435 deaths from 10.6 million cases.
In London, the FTSE 100 index was down 23.20 points, or 0.4%, at 6,315.74 on Friday. The index still is on track to end the week up 7%.
The FTSE 250 was down 74.02 points, or 0.4%, at 19,228.15. The AIM All-Share was up 0.4% at 997.98.
The Cboe UK 100 index was down 0.5% at 628.08. The Cboe 250 was down 0.2% at 16,519.22. The Cboe Small Companies was up 0.5% at 10,624.78.
The CAC 40 index in Paris was up 0.6% and Frankfurt's DAX 30 up 0.3%.
"Equity markets started off in the red this morning but they have been driving higher recently, and most European indices are in positive territory. The rebound in sentiment seems a bit strange seeing as the number of new coronavirus cases in the UK, Germany and Italy are worrying. France is committed to maintaining its lockdown in the near term and so is the UK," said CMC Markets analyst David Madden.
"The health crisis is becoming more of a serious issue in the US too as cities like New York and Chicago could be in for stricter restrictions. The pandemic might not have the same negative impact on equities that it used to, seeing as there has been great progress made with respect to the drug that Pfizer and BioNTech are developing. At the same time, dealers need to be mindful that the potential Covid-19 vaccine might not get approval, and even if it does, the roll out process will probably be timely," Madden added.
In the FTSE 100, Whitbread was up 2.5%, after Barclays upgraded the Premier Inn hotel owner to Overweight from Equal Weight. The bank deemed the Premier Inn chain owner one of the most attractive stocks in the hospitality sector following this week's positive coronavirus vaccine news.
At the other end of the large-cap index, oil majors BP, Royal Dutch Shell 'A' and 'B' were down 0.2%, 0.7% and 0.8%, respectively, tracking spot oil prices lower.
Brent oil was trading lower at USD43.21 a barrel Friday midday, down from USD44.03 at the London equities close Thursday.
Elsewhere in London, Galliford Try was up 21%. The construction firm said that, since the start of its financial year in July, productivity is at near-normal levels and it is continuing to operate normally during the second national lockdown.
Galliford said it is performing in line with its expectations, with an excellent first half-year average month-end cash position towards the upper end of previous guidance of GBP125 million to GBP145 million.
The Uxbridge-based construction company said it looks set to return to profitability in the first half of this financial year and a resumption of dividend payments alongside the interim results.
The pound was quoted at USD1.3175 at midday on Friday, up from USD1.3141 at the London equities close on Thursday, amid hopes that the possible departure of UK Prime Minister Boris Johnson's top adviser will lead to a less hard line approach to Brexit talks.
Dominic Cummings, who was at the heart of the high-risk strategy of pushing for an election last year and 'Vote Leave' campaign in 2016, is reportedly set to leave his Downing Street position by the end of the year.
Cummings told the BBC that "rumours of me threatening to resign are invented" after speculation that he would follow communications director Lee Cain in leaving Number 10. However, he said that his "position hasn't changed since my January blog" when he wrote that he hoped to make himself "largely redundant" by the end of 2020.
Highly-publicised in-fighting led to the resignation on Wednesday of Cain, with Cummings said to be contemplating his own exit over the treatment of his political ally from the Brexit campaign. Cummings, who is known for an abrasive manner and propensity to upset the established order, has had a history of ruffling feathers within the Conservative Party.
Analysts at ActivTrades said: "After losing ground to the dollar and the euro during Thursday's trading, the pound regained the front foot during in Friday trading following press reports that Prime Minister Boris Johnson's closest advisor is set to leave his post by Christmas. The claims that Dominic Cummings will leave his role at Downing Street, followed in-fighting within Johnson's inner circle and represents a blow to Brexit hardliners.
"Given the continued uncertainty surrounding the outcome of the post-Brexit negotiations with the EU as well as the bleak economic and the continuing healthcare crisis in the country due to coronavirus, the fact that investors are this morning backing the pound suggests the departure of Cummings means there is an increased likelihood of a softer break from the EU."
The euro stood at USD1.1821 at midday on Friday, up from USD1.1812 late Thursday.
The eurozone economy returned to growth on a quarterly basis in the third quarter as lockdown measures eased on the continent, figures from Eurostat showed.
On a quarterly basis, eurozone gross domestic product grew by 12.6% in the third quarter, having shrunk 11.8% in the second quarter. The reading was just shy of market forecasts, cited by FXStreet, for 12.7% growth.
The third-quarter figure was revised down slightly from a preliminary estimate of 12.7%. Still, Eurostat said the latest reading still marked the sharpest increase since the series started in 1995.
On an annual basis, eurozone GBP shrank 4.4% in the third quarter, with the economy's contraction slowing from a 14.8% contraction in the second quarter.
"We expect the containment measures in most countries to remain in place for the next two or three months and to cause GDP to contract again in the fourth quarter. This week's positive news on the vaccine means that there is light at the end of the tunnel. But things will get worse before they get better," commented analysts at Capital Economics.
Against the yen, the dollar was trading at JPY104.95, down from JPY105.13. Safe-haven gold was quoted at USD1,877.59 an ounce, soft from USD1,878.64.
US stock market futures were pointed to a higher open as investors continues to grapple with the rising number of coronavirus case in the US.
The Dow Jones Industrial Average was called up 0.7%, the S&P 500 up 0.8% and the Nasdaq Composite was called up 0.5%.
On the political front, Joe Biden has won the state of Arizona, US networks said late Thursday, further cementing his lead in the Electoral College and flipping the state Democratic for the first time since 1996.
NBC, CBS, ABC and CNN declared Biden the winner in the tight race with a lead of more than 11,000 ballots, giving him the state's 11 electoral votes. Fox News and The Associated Press called the race in the southwestern state in Biden's favour on Election Night, triggering the wrath of President Donald Trump, but the other outlets held off on declaring a winner until after nine days of ballot counting.
Arizona gives Biden a 290-217 lead over Trump in the Electoral College that ultimately decides the presidency, with 270 needed to win the White House. Despite Biden being declared winner of the election on Saturday, Trump has refused to concede and continues to make baseless claims of election fraud.
In the wake of the win in Arizona, China became one of the last major countries to congratulate Biden on being elected US president.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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