(Alliance News) - The global stock market rally on the back of a promising vaccine against Covid-19 continued to stall on Friday, as economists warned against exuberance and virus cases continued to soar, particularly in the US.
Federal Reserve chief Jerome Powell said Thursday that it is "too soon to assess" the potential impact of a coronavirus vaccine on the economy in 2021, despite recent announcements that have stoked hopes.
"This is certainly good and welcome news for the medium term," Powell told a virtual conference organised by the European Central Bank.
However, "significant challenges and uncertainty remain about timing, production, distribution and the efficacy for different groups" of a vaccine, he added.
"It's too soon to assess with any confidence the implications of the news for the path of the economy especially in the near term".
The appearance was Powell's first in public since the US's Pfizer and Germany's BioNTech announced promising results in trials of their potential vaccine showing efficacy of around 90%, prompting a rapturous response on financial markets.
Playing down the immediate optimism, Powell warned that "with the virus spreading the next months could be challenging".
ECB President Christine Lagarde cautioned against "exuberant" hopes for the vaccine's economic impact, also highlighting the likely logistical challenges.
And Bank of England Governor Andrew Bailey said he hoped the positive news would reduce uncertainty over the economic outlook, but "we're not there yet".
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.7% at 6,295.77
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Hang Seng: down 0.1% at 26,138.62
Nikkei 225: closed down 0.5% at 25,385.87
DJIA: closed down 317.46 points, 1.1%, at 29,080.17
S&P 500: closed down 1.0% at 3,537.01
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GBP: steady at USD1.3143 (USD1.3141)
EUR: unchanged at USD1.1812
Gold: firm at USD1,879.04 per ounce (USD1,878.64)
Oil (Brent): down at USD42.97 a barrel (USD44.03)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1100 CET EU flash estimate gross domestic product
1100 CET EU flash estimate employment EU and euro area
1100 CET EU foreign trade
0830 EST US producer price index
1000 EST US University of Michigan survey of consumers
1030 EST US EIA weekly natural gas storage report
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UK Prime Minister Boris Johnson's most senior adviser Dominic Cummings 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. The BBC also quoted a Downing Street source as saying Cummings would be "out of government" by Christmas. It comes just a day after a bitter power struggle in Number 10 led to the resignation of Cain.
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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.
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BROKER RATING CHANGES
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GOLDMAN SACHS CUTS B&M EUROPEAN VALUE RETAIL TO 'NEUTRAL' ('BUY') - TARGET 570 (590) PENCE
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BARCLAYS RAISES WHITBREAD TO 'OVERWEIGHT' (EQUAL-WEIGHT) - TARGET 3,350 (2,500) PENCE
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MORGAN STANLEY RAISES GLAXOSMITHKLINE TO 'EQUAL-WEIGHT' (UNDERWEIGHT); PRICE TARGET 1,665 (1,695) PENCE
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JPMORGAN CUTS ULTRA ELECTRONICS TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 2,300 (2,325) PENCE
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COMPANIES - FTSE 250
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Indivior said a US federal court in the Western District of Virginia has approved the agreement between the company and the US Department of Justice and other government agencies that was announced in July. The court has dismissed all charges that were returned by a grand jury in 2019. Indivior in April of 2019 said a grand jury in the Western District of Virginia had issued an indictment of 28 felony counts against the company related to fraud. Earlier this year, Indivior had said it would pay USD600 million to resolve criminal charges in the US related to its Suboxone film opioid dependence medication. On Friday, Indivior said it was pleased to put this matter behind it and move forward in a manner that provides certainty to its business.
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Galliford Try Holdings 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 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 group's strategy is focused on robust risk management, sustainable growth, careful cash management and margin progression. The group is well capitalised with no debt, no pension liability, a portfolio of Public Private Partnerships assets, and a strong order book and is making good progress on its strategic priorities and the financial targets set out in September 2020, including expected reinstatement of dividend," Galliford said.
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Tritax Big Box REIT said it has acquired a temperature-controlled distribution unit in a key South Coast location within the Nursling Industrial Estate in Southampton, for GBP44.2 million. Tritax said the acquisition secures an attractive asset in a prime logistics location, providing critical cold-store capabilities close to a key UK port. The building is let to grocer Tesco, and Tritax believes the site provides a range of opportunities to deliver near-term value through asset management. "Benefiting from a strong existing tenant and a robust underlying occupational market, this building presents us with several attractive asset management opportunities which we expect will drive income and capital value growth. While the investment market for logistics assets continues to strengthen, there remain select attractive acquisition opportunities where significant value can be added through asset management," the company said.
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Hipgnosis Songs Fund said it bought a share of the music rights of R&B artist Rick James. The music royalties investor said it bought a 50% interest in a catalogue of 97 songs that includes hit 'Super Freak'.
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COMPANIES - GLOBAL
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The US government announced Thursday it would delay enforcement of a ban on TikTok, saying it would comply with a court order in favor of the Chinese-owned social media sensation. The Trump administration has insisted on the need to ban the fast-growing app, saying it has links to the Chinese government through its parent company ByteDance, and that user data could be obtained by Beijing. The hit short-form video app – which has some 100 million users in the US – was given a reprieve after the Commerce Department said it was holding off on banning it owing to an injunction by a federal judge issued on October 30. "The department is complying with the terms of this order," it said in a statement, adding that the ban "will not go into effect pending further legal developments." The government has launched an appeal against the judge's decision in the case, which was brought by TikTok influencers.
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Friday's Shareholder Meetings
DFS Furniture PLC - AGM
Byotrol PLC - AGM
Galliford Try Holdings PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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