LONDON MARKET CLOSE: Muted Friday Unable To Dent Positive Week

(Alliance News) - Stocks in London limped to a lacklustre end to the week on Friday, with AstraZeneca's potential coronavirus vaccine coming under increased scrutiny.

The UK government said it has asked its independent medicines regulator to assess AstraZeneca's vaccine as part of the formal approval process for the drug to be rolled out by the end of the year.

AstraZeneca has completed phase 3 clinical trials of its vaccine, the last stage before regulatory approval. But under British rules, the government must also ask the independent Medicines & Healthcare products Regulatory Agency to green light the drug.

Astra added 0.4% Friday.

On Thursday, the head of British drug manufacturer AstraZeneca said further research was needed on its Covid-19 vaccine after questions emerged over the protection it could offer.

"Now that we've found what looks like a better efficacy we have to validate this, so we need to do an additional study," Chief Executive Pascal Soriot told Bloomberg in an interview.

The FTSE 100 index added 4.65 points, or 0.1%, at 6,367.58. The large-cap index added 0.6 % this week.

The mid-cap FTSE 250 index gained 66.37 points, or 0.3%, at 19,462.71. The AIM All-Share index ended slightly higher, gaining 0.98 of a point, at 1,039.01.

The Cboe UK 100 index closed 0.1% higher at 634.21. The Cboe 250 closed down 1.0% at 16,581.96. The Cboe Small Companies ended down 1.5% at 11,276.56.

"As the final full week of November trading winds down we find markets still in a guardedly-positive mood. It has been a great month, continuing of course the strong run since March for many markets, and while it might not be going out on a high there is still no sign of any correction on the horizon," IG's Chief Market Analyst Chris Beauchamp said.

He continued: "However, high sentiment and breadth readings should give investors pause, with a legitimate question being how much of the expected December gain has been pulled forward into the preceding month. While election concerns seem to have almost entirely disappeared, and rightly so given Trump's comments about making way for the new administration, the virus situation remains, and still has the power to shock should the Thanksgiving holiday produce another surge in US cases."

UK stocks were underperforming those in in mainland Europe. The CAC 40 in Paris and the DAX 30 in Frankfurt advanced 0.6% and 0.4%, respectively.

"The difference between the FTSE and its Western peers is the underlying Brexit talk anxieties that are only going to become more pronounced in the coming days and weeks - and sent the pound 0.3% lower against the euro - and fears that the Oxford/AstraZeneca vaccine might not be quite as effective as first claimed," SpreadEx analyst Connor Campbell.

A Brexit deal is still possible, the UK's chief negotiator has insisted as face-to-face negotiations are set to resume with the clock ticking down to an agreement deadline.

But David Frost warned that a deal is only possible if Brussels recognised British sovereignty in key areas.

Frost was speaking ahead of face-to-face talks, which he said would take place on Saturday.

The comments came after EU chief negotiator Michel Barnier warned that "significant divergences" still remain ahead of the UK exiting the Brexit transition period at the end of December.

The pound was quoted at USD1.3331 on Friday evening, broadly flat from USD1.3333 at the London equities close Thursday.

The euro stood at USD1.1957, up from USD1.1908. Against the Japanese yen, the dollar was trading at JPY103.99, down from JPY104.27.

Wall Street was painted green on Friday's half-day, with the Dow Jones Industrial Average up 0.1%, the S&P 500 up 0.3% and the Nasdaq Composite up 1.1%.

Financial markets in the US reopened for a half-day on Friday after being closed on Thursday for Thanksgiving.

In London, Homserve gave back 1.3%. The home emergency cover provider finds itself on the brink of automatic demotion from the large-cap index ahead of the FTSE Russell index review changes next week. Homeserve currently ranks 115th in the FTSE 350 by market capitalisation, just below the safety threshold at 110th place, with a total market value of GBP3.4 billion.

In the FTSE 250, Indivior was the worst performer, closing down 20% after the drugmaker said Reckitt Benckiser has submitted a GBP1.07 billion claim against the company.

The claim related to an indemnity contained in the demerger agreement entered into between the two companies in November 2014. Indivior spun off from consumer health and hygiene firm Reckitt and listed on the London Stock Exchange in December of that year.

The claim was submitted on November 13.

Indivior said: "The claim has not been served on the company and the company does not have any further details at this time. The company will assess with its advisors the background and merits to the case and will provide an update in due course."

Reckitt lost 1.3% Friday.

JD Wetherspoon bounced back in afternoon trade, gaining 1.2%, despite opening down 4.9%. The pub chain complained bitterly about the UK government's post-lockdown tier system, which effectively forces almost half of its about 870 pubs to close.

Just 13 Wetherspoon pubs in England are in areas classified as Tier 1, under the new UK virus restrictions that go into place from next week. In addition, there are 51 pubs in Wales, where the regulations equate to Tier 1 in England.

In Tier 1, the rule of six applies indoors and outdoors, but in Tier 2 there will be a ban on households mixing indoors, and pubs and restaurants will only be able to sell alcohol with a "substantial meal". Tier 3 measures mean a ban on households mixing, except in limited circumstances such as in parks.

For Wetherspoon, Tier 2 affects 435 pubs. This tier includes 17 pubs in Scotland where the regulations approximate to Tier 2 in England, the pub chain said.

"These rules greatly reduced pub capacity and provided strict social distancing and hygiene standards but, with difficultly, allowed pubs to trade viably. It is very disappointing that yet another raft of regulations has been introduced, which has effectively closed half our pubs," said Chair Tim Martin.

Brent oil was trading at USD48.05 a barrel Friday evening, up from USD47.77 late Thursday. Gold fetched USD1,786.40 an ounce, lower from USD1,810.32.

A busy global economic calendar next week is headlined by US Fed Chair Jerome Powell testifying before Congress on Tuesday and US non-farm payrolls and unemployment on Friday.

On Monday, there is China non-manufacturing PMI overnight and German consumer price index at 1300 GMT. There is a slew of manufacturing manufacturing PMIs, with Japan and China overnight, followed by Germany, eurozone, and UK at 0855 GMT, 0900 GMT and 0930 GMT, respectively. US Markit manufacturing is due 1445 GMT.

On Thursday, there will be a run of service PMI readings, with China and Japan overnight, then Germany, eurozone and UK at 0855 GMT, 0900 GMT and 0930 GMT, respectively. US ISM services at 1500 GMT.

The local corporate calendar on Monday has half-year results from electronic parts supplier discoverIE Group, carpet designer Victoria, venture capital firm Draper Esprit, and social housing investor Civitas Social Housing.

By Paul McGowan; paulmcgowan@alliancenews.com

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