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(Alliance News) - Stocks in London ended lower on Thursday, hurt by mixed UK economic data and as the rally following promising news on a Covid-19 vaccine from earlier this week finally waned.
"Stock markets in Europe are in the red after three days of impressive gains. The buying mania that was experienced earlier this week has now faded as traders are starting to realise that any potential Covid-19 vaccine would take a while to be widely distributed, so therefore the pandemic won't be under control for potentially months. A mixture of profit taking and concerns about the health crisis are weighing on stocks," CMC Markets UK analyst David Madden noted.
The FTSE 100 index closed 0.7%, or 43.16 points lower at 6,338.94. The FTSE 250 ended 0.2%, or 38.02 points lower, at 19,302.17, and the AIM All-Share closed down 0.1%, or 1.02 points, at 994.45.
The Cboe UK 100 index closed down 0.7% at 632.02. The Cboe 250 ended 0.4% lower at 16,547.16. The Cboe Small Companies slipped 0.5% to 10,559.18.
The UK economy returned to growth on a quarterly basis in the third quarter as lockdown measures eased, according to figures from the Office for National Statistics.
On an annual basis though, the UK's gross domestic product fell 9.6% in the three months to September, the economy's contraction slowing from 21.5% in the second quarter of 2020. The third-quarter reading was slightly worse than market forecasts, cited by FXStreet, for an annual contraction of 9.4%.
However, on a quarterly basis, UK GDP grew by 15.5% in the third quarter, having shrunk by 19.8% in the second quarter. The quarterly figure also slightly missed the consensus estimate, which called for 15.8% growth.
The ONS said this was the largest quarterly expansion in the UK economy since quarterly records began in 1955 and reflected the continued easing of lockdown restrictions in the third quarter.
UK industrial production decreased 6.3% year-on-year in September following a 6.4% decline in August. Manufacturing production shrank 7.9% on an annual basis in September, easing from an 8.4% drop in August.
In company news, Rolls-Royce Holdings gave back 8.6% on Thursday, having received acceptances of around 94% of the shares to be issued under its GBP2 billion rights issue.
Under the jet engine maker's fully underwritten 10-for-3 rights issue of 6.44 billion shares at 32 pence each, announced at the start of October, the company received acceptances in respect of 6.06 billion shares.
Underwriters BNP Paribas, Citigroup, Goldman Sachs, HSBC, Jefferies, Morgan Stanley, Credit Agricole CIB, Santander, SMBC Nikko and Societe Generale successfully found subscribers for the remaining 375.1 million shares for which acceptances were not received.
Despite ending Thursday in the red, Rolls-Royce shares are up 29% so far this week. The company was among the firms that saw a share price jump following news that a Covid-19 vaccine is tantalisingly close.
"Despite hopes of a recovery in the wake of the Pfizer announcement, today's GBP2 billion rights issue from Rolls-Royce highlights the ongoing battle to stay afloat for many of the hardest-hit stocks. The shift into value seen over much of the week does appear to stop here, with traders taking stock over exactly what is and isn't justified as a long-term recovery play. With Rishi Sunak failing to rule out another 'eat-out-to-help-out' scheme, markets will be fearful of a third lockdown to the detriment of businesses around the country. Despite hopes that a vaccine will spark a rousing recovery in economic activity, the likeliness is that the virus will continue to stifle any such rebound owing to the gradual nature of any such rollout," said Joshua Mahony, senior market analyst at IG.
Luxury goods firm Burberry Group finished 2.3% lower after it said earnings for the first half of financial 2021 were hurt by global store closures due to the pandemic but reassured investors that it started to see "strong recovery" in the second quarter.
For the six months ended 26 September 2020. Burberry posted pretax profit of GBP73 million, down 62% from GBP193 million recorded a year prior. This was as revenue fell 31% year-on-year to GBP878 million from GBP1.28 billion
The company noted financial 2021 commenced with 60% of its stores closed, resulting in comparable store sales declining 45% from the prior year. However, it highlighted a recovery in the second quarter, which saw comparable store sales down by only 6%. It added the improvement has accelerated in the past two months, with comparable store sales in September down by a low single digit and positive in October.
Elsewhere in the retail space, B&M European ended down 1.1% after it declared a bumper special dividend after a sharp rise in interim profit.
For the half year to September 26, revenue was up 25% to GBP2.24 billion from GBP1.79 billion a year ago, and pretax profit more than doubled to GBP235.6 million from GBP106.0 million.
B&M raised its interim dividend by 59% to 4.3p per share from 2.7p last year. Further, it declared a special dividend of 25.0p, equating to around a GBP250 million payout in total.
UK power lines operator National Grid closed 0.8% lower, having reported an increase in pretax profit despite taking a hit from the pandemic in the first half of its financial year.
Revenue for the six months to the end of September amounted to GBP6.54 billion, up 4.0% from GBP6.29 billion a year ago. Pretax profit increased 78% to GBP720 million from GBP404 million.
"We continue to expect a full-year impact from Covid-19 of around GBP400 million to underlying operating profit given the seasonal nature of our US regulated business," said National Grid.
However, the company added, it expects to be able to recover the majority of its US Covid-19 related costs through regulatory mechanisms.
GlaxoSmithKline closed up 0.1% on news it has, along with Canadian biopharmaceutical firm Medicago, started phase 2/3 clinical trials for plant-derived Covid-19 vaccine candidate CoVLP.
Pharmaceutical company Glaxo stated that the phase 2 trial will be to evaluate the safety and immunogenicity of the vaccine. The trial will be conducted in Canada and dependent on approval by the Food & Drug Administration, in the US.
The phase 3 part of the trial, scheduled to start before the end of 2020, will enrol over 30,000 volunteers in North America, Latin America and Europe and will evaluate the efficacy and safety of the formulation, compared to placebo.
This after drugmaker Pfizer announced that trials so far had shown its vaccine candidate, being developed with German company BioNTech, was 90% effective in ongoing trials.
In Paris, the CAC 40 ended down 1.5%, while the DAX 30 in Frankfurt ended 1.2% lower.
The pound was quoted at USD1.3141 at the London equities close, down from 1.3199 at the same time on Wednesday.
The euro stood at USD1.1812 at the European equities close, up from 1.1763 a day before.
Against the yen, the dollar was trading at JPY105.13, down from JPY105.57 late Wednesday.
Stocks in New York were in the red at the London equities close. The DJIA and S&P 500 were both down 0.6% and the Nasdaq Composite was 0.2% lower.
This after the latest figures from the US Department of Labor showed that inflation edged lower in October, missing market forecasts for a modest rise.
On an annual basis, US consumer prices rose 1.2% in October, decelerating from a 1.4% increase in September. The reading was just shy of the market forecast, cited by FXStreet, of 1.3%.
On a monthly basis, consumer prices were flat in October following an 0.2% rise in September. The monthly figure missed the market estimate for an 0.2% increase.
Moreover, data from the Labor Department showed the number of US workers filing for unemployment benefits declined to 709,000 in the week ended November 7, from the previous week's revised level of 757,000 claims. It was the lowest level since March. Last week's figure originally was reported at 751,000.
The latest initial jobs claims figure was well below market expectations of 735,000 claims.
Continuing US jobless claims fell to 6.8 million in the week ended October 31, from 7.2 million claims the week before.
Brent oil was trading lower at USD44.03 a barrel at the equities close, from USD44.30 late Wednesday.
Gold traded higher. An ounce of the precious metal was quoted at USD1,878.64 at the London equities close, against USD1,863.53 on Wednesday.
The economic calendar for Friday has EU GDP and employment flash estimate at 1000 GMT. Then in the afternoon, a US PPI print is scheduled for 1330 GMT.
The local corporate calendar for Friday has half-year results from West Midlands-based iron caster Castings.
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