LONDON MARKET OPEN: Stocks Down As Central Bankers Curb Optimism

(Alliance News) - Stock prices in London opened lower on Friday as the strong coronavirus vaccine-inspired rally that began the week continued to lose momentum, with central bankers highlighting the need for caution.

Federal Reserve Chair 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.

ECB President Christine Lagarde cautioned against "exuberant" hopes for the vaccine's economic impact, also highlighting the likely logistical challenges.

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".

Bars and restaurants in New York city will close early from Friday as the coronavirus outbreak surges across the US and Europe, where Greece is being forced into a nighttime curfew.

It comes as the US, already the world's hardest-hit country, experiences its third and worst-by-far spike in infections, and large parts of Europe shut down again to tackle the spread of illness.

In London, the FTSE 100 index was down 47.27 points, or 0.7%, at 6,291.66. The FTSE 250 was down 72.88 points, or 0.4%, at 19,229.69. The AIM All-Share was flat at 995.28.

The Cboe UK 100 index was down 1.0% at 625.08. The Cboe 250 was down 0.5% at 16,464.22. The Cboe Small Companies was flat at 10,560.78.

The CAC 40 index in Paris was down 0.2% and Frankfurt's DAX 30 down 0.3%.

On the London Stock Exchange, Whitbread was the best blue-chip performer, up 3.0%, after Barclays upgraded the Premier Inn chain owner to Overweight from Equal Weight.

At the other end of the large-cap index, oil majors BP, Royal Dutch Shell 'A' and 'B' were down 1.6%, 1.6% and 1.5%, respectively tracking spot oil prices lower.

Brent oil was trading lower at USD42.95 a barrel Friday morning, down sharply from USD44.03 at the London equities close Thursday.

In the FTSE 250, Royal Mail was the best performer, up 3.1% after Credit Suisse upgraded the postal operator to Neutral from Underperform.

Elsewhere in London, Galliford Try was up 17% after the construction firm 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 Uxbridge-based 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 Japanese Nikkei 225 index closed down 0.5% on Friday. In China, the Shanghai Composite ended down 0.9%, while the Hang Seng index in Hong Kong finished down 0.3%.

The pound was quoted at USD1.3162 early Friday, up from USD1.3141 at the London equities close.

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.

"The news early this morning of British PM Johnson's top aide Dominic Cummings leaving will be seen by many as meaning a Brexit deal is now more likely. That is a reasonable view given that he has been seen as one of the most aggressive Brexiteers around Boris Johnson. So, there might be more sterling upside today," said AxiCorp's Stephen Innes.

The euro stood at USD1.1811, flat from USD1.1812. Against the yen, the dollar was trading at JPY105.05, down from JPY105.13.

Gold was quoted at USD1,878.59 an ounce, flat from USD1,878.64.

The economic calendar for Friday has eurozone GDP readings at 1000 GMT. Then in the afternoon, a US PPI print is scheduled for 1330 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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