(Alliance News) - Stocks in London ended mostly higher on Friday as investors balanced hopes for a coronavirus vaccine against fears over rising cases around the world.
Breakthroughs on a drug to fight Covid-19, along with Joe Biden's election win, have fired a rally in global equities this month as investors bet that life can begin to get back to a semblance of normality in the new year.
However, the wind has been taken out of their sails by a stream of figures showing the virus rapidly spreading, setting new records in the US and Europe while spiking in several other countries.
The FTSE 100 index closed up 17.10 points, or 0.3%, at 6,351.45, ending the week 0.1% higher.
The FTSE 250 ended down just 0.49 of a point at 19,506.96, finishing the week 1.0% higher. The AIM All-Share closed up 10.92 points, or 1.1%, at 1,030.35, a 3.6% rise for the week.
The Cboe UK 100 index closed 0.2% higher at 631.70 on Friday. The Cboe 250 ended flat at 16,870.66. The Cboe Small Companies finished up 0.2% to 11,277.48.
In Paris the CAC 40 closed 0.4% and the DAX 30 in Frankfurt ended 0.4%.
"The small gains in Europe and modest losses in the US sum up an indecisive session for stock markets, and indeed, apart from the initial huge rally on 9 November, an indecisive three-week period. Equity markets have been noticeably unable to break through their high from earlier in the month, despite further vaccine news, and as we head towards the final full week of November stock markets are still scrabbling around for a catalyst to drive them higher," said IG Group's Chris Beauchamp.
On the London Stock Exchange, Sage Group finished by far the worst blue-chip performer, down 13%, as investors grew concerned by the accounting software firm's plans to increase spending and the pressure this would place on margins.
For its financial year ended September 30, Sage reported pretax profit of GBP310 million, up 17% from GBP266 million recorded the year prior. Organic recurring revenue rose 8.5% to GBP1.59 billion.
Looking to the new financial year, Sage said it expects organic recurring revenue growth to be around 3% to 5%, weighted towards the second half. The Newcastle-upon-Tyne-based company said Sage Business Cloud adoption and growth will remain its "key objective" this coming financial year and beyond, adding it intends to increase its investment in sales and marketing and product development.
This is expected to result in a planned reduction in organic operating margin of up to three percentage points.
"Declining organic operating profit margins have cast a shadow over its latest results and the guidance is for further margin contraction as it invests more in the business," said AJ Bell investment director Russ Mould.
The pound was quoted at USD1.3284 at the London equities close, up sharply from USD1.3225 at the same time on Thursday, following well-received UK retail sales figures.
UK retail sales growth slowed month-on-month in October, but still managed to beat forecasts as consumers started Christmas shopping early, data showed on Friday.
Retail sales rose 1.2% month-on-month in October, marking the sixth consecutive month of growth in the industry. While this was slower than the 1.4% posted for September, it beat expectations, according to FXStreet, of stagnation in the month.
Annually sales growth accelerated to 5.8% from 4.6% in September, again beating forecasts for a slower 4.2% increase.
Feedback suggested that consumers had started Christmas shopping earlier this year, the ONS said, further helped by early price discounting by a range of stores.
"The pound is gaining ground against the dollar and the euro during early Friday trading. Despite lingering uncertainty over the progress of Brexit talks with the EU, investors reacted positively to the October retail sales figures published earlier today, surpassing the expectations of analysts," explained analysts at ActivTrades.
London-listed retailers got a boost from the positive retail sales numbers as the crucial Christmas season approaches. FTSE 100 component JD Sports Fashion ended up 2.8%, while midcap retailers Dunelm and Dixons Carphone closed up 5.4% and 0.8% respectively.
Elsewhere, ONS data showed Britain's national debt has risen to its highest share of economic activity since the early 1960s as public sector net debt just surpassed 100% of GDP - leading UK Chancellor Rishi Sunak to announce a freeze on public sector pay.
The euro stood at USD1.1861 at the European equities close, up from USD1.1840 late Thursday despite the failure of European leaders to overcome the impasse caused by Hungary and Poland vetoing the EU's stimulus package.
Hungarian Prime Minister Viktor Orban said Friday that stalled EU budget talks will reach an agreement despite Hungary and Poland's veto over a plan to tie funds to rule of law criteria.
"Many types of solutions are possible, it's just a question of political will," Orban said during a public media interview Friday.
Acceptable solutions for Hungary and Poland "would be those reached on the basis of legal standpoints rather than the political majority," he said.
The EU's EUR1.8 trillion long-term budget and coronavirus rescue package was vetoed Monday by the two countries, both accused by Brussels of rolling back democratic freedoms.
Despite the fact that Hungary receives EU funding estimated at more than 3.0% of its annual output, one of the highest shares of any EU member state, Orban said that even if the EU budget row weren't resolved, planned developments for the next 10 years would still be implemented.
"The latest remarks from defiant Hungarian PM Orban and his Polish counterpart Mateusz Morawiecki imply that they are not willing to compromise on the critical issue of sovereignty. Their defiance may cause serious delays in redistribution of funds from the EUR 1.8 trillion financial package which in turn could slow down the pace of recovery across the EU," analysts at Rabobank cautioned.
Against the yen, the dollar was trading at JPY103.82, flat from JPY103.88 late Thursday.
Stocks in New York were mostly lower at the London equities close as investors weighed worries about rising coronavirus cases against further progress on vaccines to address the pandemic.
The DJIA was down 0.5%, the S&P 500 index down 0.3% and the Nasdaq Composite was up 0.1%.
Pfizer and its German partner BioNTech confirmed they would seek approval on Friday to roll out their coronavirus vaccine. They are eyeing December for final approval.
The announcement comes as US coronavirus cases continue to rise, averaging 167,400 cases per day this week and prompting fresh restrictions to slow the outbreak.
Markets had a muted reaction to a decision by US Treasury Secretary Steven Mnuchin against extending emergency lending facilities established with the Federal Reserve.
Mnuchin said on CNBC that the decision, which was criticized by the Fed, was required by congressional mandates for the funds and that he would urge Congress to redeploy up to USD800 billion in funds to small businesses and others who are struggling as the virus depresses economic activity.
Brent oil was quoted at USD44.00 a barrel at the London close, lower from USD44.22 at the close Thursday.
Gold was quoted at USD1,874.10 an ounce at the London equities close, higher against USD1,861.42 late Thursday.
The economic events calendar on Monday has PMI readings from France, Germany, the eurozone, UK and US at 0815 GMT, 0830 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively. In addition, financial markets in Japan will be closed on Monday for the Labor Thanksgiving holiday.
The UK corporate calendar on Monday has annual results from newspaper publisher Daily Mail & General Trust and interim results from eggless cake maker Cake Box.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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