(Alliance News) - Stock prices in London were lower at midday on Friday as investors remained concerned about a spike in coronavirus cases and uncertainty grew ahead of next week's US presidential election.
Global equities have endured a torrid week as governments were forced to act to contain a second wave of disease in the northern hemisphere. France has essentially shut down for November, while Germany is putting tough measures in place and several other countries are in danger of having to follow suit.
In London, the FTSE 100 index was down 4.15 points, or 0.1%, at 5,577.60. The large-cap index is on track to end the week down 3.5%.
The FTSE 250 was down 26.15 points, or 0.2%, at 17,151.53. The AIM All-Share was flat at 949.69.
The Cboe UK 100 index was up 0.1% at 554.68 points. The Cboe 250 was down 0.1% at 14,429.86. The Cboe Small Companies was down 0.1% at 9,424.09.
In Paris the CAC 40 index was up 0.6%, while the DAX 30 in Frankfurt was down 0.3%.
"European markets are drifting lower as we end the week, with stocks remaining under pressure after global daily coronavirus cases hit a record high after breaching the 500,000 threshold. While much of the selling pressure seen this week has been focused on mainland European indices such as the DAX, the futures markets point towards a US-led sell-off today as new coronavirus cases in the country topped 91,000 with just days left until the election," said IG Group's Josh Mahony.
The Dow Jones Industrial Average was called down 0.5% and the S&P 500 down 0.6%. The tech-heavy Nasdaq Composite was called down 1.0%, amid some disappointment with earnings.
All five of the so-called FAANGs - Facebook, Amazon, Apple, Netflix and Google-owner Alphabet - reported earnings after New York market close on Thursday.
On the London Stock Exchange, NatWest Group was the best blue-chip performer midday Friday, up 5.5% after the state-backed lender swung to a profit in the third quarter, while saying credit provisions for the year will be at the lower end of a range previously guided.
For the quarter ended September 30, net interest income was down to GBP1.93 billion from GBP2.01 billion last year, and total income fell to GBP2.42 billion from GBP2.90 billion.
The company, formerly known as Royal Bank of Scotland Group, swung to a operating profit of GBP355 million in the third quarter following a loss of GBP8 million at the same time last year. Attributable profit was GBP61 million, improved from a GBP315 million loss last year.
NatWest booked a further GBP254 million provision for expected bad loans, which is up from GBP213 million a year before but down sharply from GBP2.06 billion in the previous quarter.
Looking ahead, NatWest said its full-year impairment charge is likely to be at the lower end of the GBP3.5 billion to GBP4.5 billion range following the limited level of defaults across lending portfolios and associated expected credit losses stage migration within the third quarter. It also expects risk-weighted assets to be below the previously guided range of GBP185 billion to GBP195 billion at the end of 2020.
"A good set of numbers to round off a strong performance by the UK banks but doubts remain about a potential increase in impairments down the road, weak economic growth in the UK, Brexit challenges, and the threat of negative rates eating away at margins," said Markets.com analyst Neil Wilson.
UK peers Barclays and Lloyds were up 2.5% and down 0.2% respectively. The FTSE 350 Banks sector index is up 3.0% so far this week.
Royal Dutch Shell 'A' and 'B' shares were up 0.8% and 0.7% respectively after Barclays raised the oil major to Equal Weight from Underweight. The bank said Shell's latest strategic developments, unveiled on Thursday, demonstrates the strengths it has to transition towards cleaner energy.
At the other end of the large caps, Glencore was down 1.5% after the miner said production across most of its commodities declined in the year to date, while it cut its guidance for coal production amid extended worker strikes at Cerrejon in Colombia.
Full-year production guidance was maintained for all resources except for coal, which was decreased to approximately 109 million tonnes from the previously forecast 114 million tonnes.
The pound was quoted at USD1.2967 at midday on Friday, up from USD1.2902 at the London equities close Thursday.
The euro was quoted at USD1.1666 midday Friday, flat from USD1.1661 late Thursday in London, following a slew of economic data releases from the continent.
The eurozone economy grew in the third quarter of 2020 but remained in deflation for the third consecutive month, the latest figures from Eurostat showed.
On a quarterly basis, the eurozone economy grew by 12.7% in the three months to September, recovering from a record slump of 11.8% in the second quarter. The reading beat market forecasts, cited by FXStreet, for growth of 9.4%.
Annually, eurozone gross domestic product shrank by 4.3% in the third quarter, easing from a record decline of 14.8% in the second quarter. However, the figure beat expectations for a 7.0% drop in activity.
The German economy grew in the third quarter of 2020 as the country enjoyed a period of relief from virus restrictions, official data showed. Federal statistics agency Destatis said the German economy grew 8.2% in the third quarter versus the previous quarter.
Economic activity in France bounced back strongly in the third quarter following the lifting of the coronavirus lockdown, data showed. French gross domestic product expanded by 18.2% in the period from July to September compared with the preceding three months, the national statistics office Insee said.
Close Brothers Chief Investment Officer Robert Alster said: "Whilst Europe's two largest economies, France and Germany, report positive growth, they approach winter in the midst of another stringent lockdown. Spain and Italy are also imposing further restrictions. These dark economic clouds are likely to squash any green shoots of recovery in the services sector as fears of a double dip recession take hold. In truth, the current outlook is starting to look at odds with the ECB's prediction that the eurozone's economy will grow back to its pre-crisis level by the end of 2022.
"EU decision makers have a lot to consider in the coming month with policy currently left unchanged and no expansion to the asset purchase programme, as some might have hoped. Markets will be hoping that Christine Lagarde, who's been keeping her cards close to her chest, is lining up further stimulus in good time for Christmas."
Data from Eurostat also showed consumer prices in the euro area are expected to drop 0.3% on an annual basis in October, an unchanged pace of deflation from September. However, the annual core consumer price measure, which excludes energy, food, alcohol and tobacco, increased 0.2% in October, the same as in September.
Against the yen, the dollar was trading at JPY104.44, down from JPY104.64.
Brent oil was trading at USD38.24 a barrel Friday at midday, up from USD37.56 a barrel at the London equities close Thursday. Gold was quoted at USD1,874.30 an ounce, up from USD1,869.88.
US stock market futures were pointed lower after US tech stocks were punished by investors after the market close on Thursday. Apple, Amazon and Facebook warned the outlook was murky, owing to the damage caused by the coronavirus.
Twitter's user growth fell short of expectations in the third quarter and warned of further delays to the launch of a new advertising system.
Apple, Amazon, Facebook and Twitter were down 4.1%, 1.4%, 1.0% and 15% respectively in pre-market trade.
"Many analysts have also pointed out that the rise in 10-year rates has added greater volatility to the high flying Nasdaq leaders which have been trading at multi-decade high valuations. As US real yields rise they provide competition to those equities and even massive earnings gains offer no protection from selloff especially if the earnings growth pace cannot be sustained," said analysts at BK Asset Management.
Eyes are now on Tuesday's US presidential election, with expectations challenger Joe Biden will win the White House, while Democrats could sweep both houses of Congress, which observers say could see the passage of a huge new stimulus.
But despite Biden being well ahead of incumbent Donald Trump in national and battleground polls, traders remain nervous that the president could contest any tight result, having spent much of the campaign warning of mail-in voter fraud.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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