LONDON MARKET CLOSE: FTSE Trails Peers As Vaccine Boost Wanes

Mon, 23rd Nov 2020 17:01

(Alliance News) - European equities slipped into the red late on Monday, with the FTSE 100 eventually succumbing to a stronger pound, though some of London's stocks most beleaguered by the pandemic got a boost from the latest vaccine news.

Data from AstraZeneca on Monday showed its Covid-19 vaccine candidate, developed alongside Oxford University, is up to 90% effective.

Monday's announcement from Astra boosted hopes of an end to bruising lockdown measures and came after news that two other leading vaccine candidates - one by Pfizer and German partner BioNTech and another by US firm Moderna - have been shown to be 95% effective in trials.

The FTSE 100 index lost 0.3%, or 17.61 points to close at 6,333.84. The FTSE 250 added 0.4%, or 75.39 points, at 19,582.35 while the AIM All-Share also rose 0.4%, or 4.01 points, at 1,035.04.

The Cboe UK 100 index closed up 0.15 of a point at 631.85. The Cboe 250 ended up 0.8% at 16,996.61, and the Cboe Small Companies rose 1.3% at 11,421.12.

The pound was quoted at USD1.3289 at the London equities close on Monday, improved from USD1.3284 on Friday. Sterling was as high as USD1.3397 earlier in the session, however.

"The FTSE 100 is underperforming versus its continental counterparts as the firmer pound has dented the market," noted CMC Markets analyst David Madden.

The CAC 40 in Paris and the DAX 30 in Frankfurt also slipped into the red late in trade, though their declines were tempered at 0.1%.

"It has been a lacklustre start to the week for stocks, as equities make modest gains while continuing to search in vain for a real catalyst to drive further advances," IG Market Analyst Chris Beauchamp said.

In London, Astra shares closed down 3.8%. The Anglo-Swedish drugmaker said it is making "rapid progress" in manufacturing, with a capacity of up to 3 billion doses of the vaccine in 2021 on a rolling basis, pending regulatory approval.

The vaccine can be stored, transported and handled at normal refrigerated conditions, comprising 2 to 8 degrees Celsius or 36 to 46 degrees Fahrenheit, for at least six months and administered within existing healthcare settings.

UK Health Secretary Matt Hancock told Sky News that the UK has "100 million doses on order and should all that go well, the bulk of the rollout will be in the new year".

"Though up to 90% effective dependent on how it is administered, the main takeaway for investors was the headline that, on average, the vaccine has an efficacy rate of 70.4%," noted Spreadex analyst Connor Campbell.

"If that news had been released before the Pfizer/BioNTech and Moderna statements, investors likely would've jumped for joy; in comparison to the 90% and 95% efficacy reported by those other trials, however, the Oxford vaccine can't help but seem a tad disappointing."

However, Shore Capital's Adam Barker noted that "any vaccine with an efficacy of 70%" will be important to allow society to re-emerge from restrictions.

"Indeed, an efficacy of 60-70% is in line with what most people would have expected prior to the trials starting," noted Shore's Barker.

The vaccine news boosted the travel sector, which has been badly hit by Covid-19 restrictions.

British Airways parent International Consolidated Airlines Group closed 5.5% higher, bettered only in the FTSE 100 by jet engine maker Rolls-Royce, which jumped 7.7%. Year-to-date, the stocks are still down 61% and 54% respectively.

In the FTSE 250, budget carrier easyJet rose 6.9% and cruise ship firm Carnival gained 3.7%.

England will face tiered coronavirus restrictions until the end of March, despite the latest successful vaccine trials and rapid tests presenting a "route out of the pandemic".

As the lockdown ends on December 2, more parts of England are expected to be placed into higher tiers than they were before the national restrictions were imposed. Appearing via video link from coronavirus self-isolation in Downing Street, Johnson told MPs the three-tiered approach had been beefed up.

Under the new system's tier 2 restrictions, alcohol may only be served in hospitality settings as part of a substantial meal. In tier 3, pubs and restaurants will only be able to offer takeaway and delivery services, while indoor entertainment, hotels and other accommodation will close.

The 10pm curfew will be relaxed, with last orders now closed at that time and premises ordered to shut at 11pm.

The Daily Telegraph newspaper earlier reported that cinemas will be allowed to reopen in England for places in tier 1 and 2.

Shares in cinema chains Everyman and Cineworld both jumped 20%.

Cineworld said it has secured "significant additional liquidity", on top of further operational measures which it hopes will deliver "enhanced profitability over the long term".

Cineworld said it has secured a new debt facility of USD450 million, which matures in May 2024 and has agreed bank covenant waivers until June 2022. Cineworld believes these steps will provide the company with financial and operational flexibility until lockdown restrictions in key jurisdictions are eased and movie studios are able to bring their enhanced pipeline of major releases back to the big screen.

Elsewhere in the leisure and hospitality spaces, Gym Group rose 3.4% while pub operators Mitchells & Butlers and JD Wetherspoon rose 7.1% and 2.8% as the industry readies to step out of lockdown in just over a fortnight.

On the economic front, business sector activity in the UK shrank as the services industry was hurt by tighter coronavirus restrictions, the latest figures from IHS Markit showed. England has been in lockdown since November 5, with all pubs, restaurants and non-essential retailers ordered to close.

The flash UK services business activity index reading was 45.8 in November, down from 51.4 in October. November's score fell below the 50.0 mark which separates expansion from contraction and was the lowest level for six months.

The flash UK manufacturing purchasing managers' index print was 55.2 in November, up from 53.7 in October. The latest figure beat market forecasts, cited by FXStreet, for 50.5 and was a two-month high. Manufacturers were allowed to continue production during the current lockdown in England.

The flash UK composite PMI score was 47.4 in November and pointed to the sharpest downturn in overall business activity since May. The composite reading slipped into contraction territory after registering 52.1 in October.

On the continent, eurozone business activity fell sharply in November, IHS Markit said, as countries introduced more aggressive measures to counter rising coronavirus infections.

The flash IHS Markit eurozone composite purchasing managers' index slumped to 45.1 in November from 50.0 in October, hitting its lowest since May. The composite index comprises the flash eurozone services PMI activity index, which came in at 41.3 in November versus 46.9 in October, and the flash eurozone manufacturing PMI output index, which was at 55.5 in November from 58.4 in October.

The deteriorating performance was broad-based, though with the service sector hardest hit from virus containment measures. Service sector output fell for a third month running, with the rate of decline accelerating sharply to the fastest since May.

Meanwhile, manufacturing output growth merely slowed in November to the lowest since the start of the sector's recovery back in July, attributable to a marked slowing in order book growth.

The euro stood at USD1.1821 at the European equities close on Monday, down from USD1.1861 on Friday.

Against the Japanese yen, the dollar was trading at JPY104.52, up from JPY103.82 late Friday.

The US private sector grew at its fastest pace in five-and-a-half years, according to IHS Markit, with both services and manufacturing firms enjoying a "steeper upturn in output".

IHS Markit's flash US composite output index jumped to 57.9 in November, improved from the final October reading of 56.3. The November flash estimate was a 68-month high, Markit noted.

"The further rise in the composite Markit PMI to a five-year high of 57.9 in November, from 56.3, suggests that the third wave of virus infections is not proving to be a major drag on economic activity yet. At that level, the index is consistent with GDP growth slowing to 4% annualised in the fourth quarter," Capital Economics Senior US Economist Michael Pearce said.

Stocks in New York were mixed at the time of the closing bell in London. The Dow Jones Industrial Average rose 0.5%, the S&P 500 was up 0.1% but the Nasdaq Composite fell 0.3%.

Big tech stocks were lower at the end of Monday morning in New York. Apple lost 2.6%, Facebook shed 1.6% and Netflix was down 1.0%.

On the flip side, oil majors Chevron and Exxon Mobil rose 2.6% and 3.8% as the latest set of Covid-19 news sparked more hope of a recovery in oil demand.

Brent oil was quoted at USD45.78 a barrel at the equities close, up from USD44.00 a barrel late Friday.

Gold prices were lower however, an ounce of the precious metal fetched USD1,8333.31, down from USD1,874.10 at the London equities close on Friday.

Tuesday's local corporate calendar has half-year results from blue-chip water company Pennon Group and FTSE 250 electrical goods retailer AO World as well as trading statements from building materials firm CRH and safety testing firm Intertek.

The economic calendar has German third-quarter gross domestic product figures at 0700 GMT and US house price index and consumer confidence readings at 1400 GMT and 1500 GMT.

By Eric Cunha; ericcunha@alliancenews.com