(Alliance News) - Stocks in London ended lower on Friday as worries about a spike in coronavirus cases which threatens to damage the global economy once again.
Key European economies including France, Germany and the UK have already imposed new or partial lockdowns, while other countries around the world including Japan and South Korea have been forced to take new containment action.
With at least 170,000 new coronavirus cases being recorded in the US with each passing day, state governors and officials have been imposing tighter restrictions on business activity after months ago lifting similar curbs.
In London, the FTSE 100 index ended down 50.89 points, or 0.8%, at 6,334.35. The FTSE 250 closed down 193.40 points, or 1.0%, at 19,506.47. The AIM All-Share closed up 1.54 points, or 0.2%, at 1,019.75.
The Cboe UK 100 index ended down 0.9% at 630.76. The Cboe 250 ended down 1.3% at 16,865.28. The Cboe Small Companies finished flat at 11,257.83.
In Paris the CAC 40 closed down 0.7% and the DAX 30 in Frankfurt ended down 0.9%.
"Coronavirus anxiety continues to restrain vaccine optimism, with a rise in US jobless claims highlighting the economic volatility that is likely to pick up towards the end of the year. Despite Pfizer promising to distribute their vaccine within hours of approval, traders are well aware of the time needed to see a tangible effect on the level of restrictions needed to stave off widespread infection," said IG Group's Josh Mahony.
"While value stocks are likely to benefit from the vaccine over the coming six months, we are clearly over that initial vaccine-led rally and instead shifting into a more volatile and unpredictable phase," Mahony added.
In the FTSE 100, WM Morrison Supermarkets closed up 2.9% after Goldman Sachs double upgraded the supermarket chain to Buy from Sell.
Halma closed up 2.7% after the hazard detection and life protection technologies manufacturer said profit declined in the first half of its financial year, but raised its dividend.
For the six months ended September 30, Halma reported a GBP96.3 million pretax profit, down 9.0% from GBP105.8 million. This came as revenue dropped 5.4% to GBP618.4 million from GBP653.7 million, including a 17% drop in UK revenue to GBP87.6 million from GBP105.2 million.
The company increased its interim dividend 5.0% to 6.87p per share from 6.54p. Halma said this reflected the board's "continued confidence in the group's resilience and long-term growth prospects."
In addition, Halma said it now expects adjusted profit before tax for financial 2021 to be around 5% below financial 2020, compared to prior guidance of 5% to 10% below financial 2020.
At the other end of the large caps, Johnson Matthey ended the worst performer, down 5.6%, after the speciality chemicals company posted a fall in interim profit.
Revenue for the six months to September 30 rose 2% to GBP6.80 billion, but pretax profit slumped 88% to GBP26 million. The fall in profit was driven by lower demand in the Clean Air segment, which mostly serves car makers, and major impairment and restructuring charges of GBP78 million.
Looking ahead, Johnson Matthey noted that activity in autos and other key markets has improved since the pandemic began and it expects a "materially" stronger second half versus the first.
In addition, the defence sector was handed a boost after UK Prime Minister Boris Johnson set out a GBP16.5 billion increase in defence spending over four years, as he said the UK faces a "perilous" period for global security.
The PM told MPs the UK will once again become Europe's leading naval power, the RAF will get new hi-tech jets and the military will be modernised.
The plans include the creation of an agency dedicated to artificial intelligence, and a "space command" capable of launching the UK's first rocket by 2022.
A National Cyber Force, combining intelligence agencies and service personnel, is already operating against terrorists, organised crime groups and hostile states, Johnson confirmed.
The announcements were billed as the biggest increase in defence spending since the Cold War and form part of a wider review of the UK's foreign policy and security objectives which will now not be published until next year. The plans set out by Johnson will see the UK spend more on defence than any Nato member except the US.
FTSE 100 listed defence giant BAE Systems closed up 1.7%.
"Whether the proposed increase in the defence budget will provide new opportunities or simply address existing funding challenges can be debated, but it is nonetheless welcome. We note that while BAE is not synonymous with Space, it does offer a range of Space products such as sensors, signal processing, command, control communication systems, and radiation hardened electronic," said Jefferies analyst Sandy Morris.
The pound was quoted at USD1.3225 at the London equities close, down sharply from USD1.3300 at the close Wednesday, as the Brexit saga continues to rumble on with the clock ticking down to secure a trade deal.
In the latest developments, high-stakes meetings between the chief negotiators in Brexit talks were suspended on Thursday after a member of the EU team tested positive for coronavirus, the bloc's Michel Barnier said.
"One of the negotiators in my team has tested positive for COVID-19," Barnier said in a tweet, as lower level meetings continued in Brussels.
In coordination with UK counterpart David Frost, Barnier said, "we have decided to suspend the negotiations at our level for a short period. The teams will continue their work in full respect of guidelines."
A post-Brexit transition phase ends December 31 and the UK and Europe will need a trade deal to govern ties - or face economic chaos after Britain leaves the EU single market.
The euro stood at USD1.1840 at the European equities close, down from USD1.1870 late Wednesday.
The single currency was under pressure after European Central Bank President Christine Lagarde on Thursday called for the EU's planned coronavirus recovery fund to become available "without delay", after Poland and Hungary blocked the adoption of the plan.
Warsaw and Budapest, with the support of Slovenia, blocked the adoption of the EU's combined EUR1.8 trillion post-virus recovery plan and long-term budget.
"After several days dominated by a vaccine-related optimism, which offered support to the euro, headwinds are now challenging the buoyancy of the single currency, causing losses versus other major currencies. The immediate reality presents record numbers of new infections and fatalities in several European countries, reminding investors that the return to normality still remains on the distant horizon. The second wave of the pandemic will surely add to the economic woes of the continent, particularly as any stimulus package continues to be blocked by a political tug-of-war between Brussels and a Polish-Hungarian coalition," said analysts at ActivTrades.
Against the yen, the dollar was trading at JPY103.88, up from JPY103.71 late Wednesday.
Stocks in New York were mixed at the London equities close following the latest uptick in US coronavirus cases and a sharp increase in new filings for unemployment.
The DJIA was down 0.1%, the S&P 500 index flat and the Nasdaq Composite up 0.5%.
US initial jobless claims unexpectedly grew last week, figures from the Department of Labor showed, amid an uptick in Covid-19 cases.
Initial jobless claims rose by 31,000 in the week ended November 14, to stand at 742,000. The previous week's figure was revised up by 2,000 to 711,000.
Consensus, according to FXStreet, had forecast the figure for the week to November 14 to fall to 707,000.
Olivier Konzeoue, FX sales trader at Saxo Markets said: "As with US Retail Sales for October which printed slightly worse than projected on Tuesday, the latest US employment figures suggest a deceleration of the US economy as Covid-19 cases continue to rise across the United States which has caught markets in a tug of war between positive news on the vaccine front and short-term pessimism due to deteriorating data.
"This puts an even greater emphasis on the need for a further round of stimulus to weather a challenging Winter ahead which could happen in the form of bond-buying by the Fed whilst negotiations on the US fiscal package remain deadlocked."
The data comes after the Johns Hopkins University tally on Wednesday showed more than a quarter-million people have died from Covid-19 in the US, marking a bleak new milestone for the pandemic.
The US, which has now registered 250,029 fatalities, has by far the highest national death toll, ahead of Brazil with 166,699 deaths, India with 130,993 deaths and Mexico with 99,026. The country now routinely records over 1,000 deaths and 150,000 new cases every day.
New York City will again close public schools this week and has re-imposed some restrictions on bars and restaurants.
Brent oil was quoted at USD44.22 a barrel at the London close, down from USD44.44 at the close Wednesday.
Gold was quoted at USD1,861.42 an ounce at the London equities close, lower against USD1,879.79 late Wednesday.
The economic events calendar on Friday has UK retail sales figures at 0700 GMT.
The UK corporate calendar on Friday has annual results from accounting software provider Sage Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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