LONDON MARKET CLOSE: Stocks Rise As UK Green Light's Pfizer Vaccine

(Alliance News) - Stocks in London ended higher on Wednesday with the internationally-exposed ...

Alliance News 2 December, 2020 | 5:03PM
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(Alliance News) - Stocks in London ended higher on Wednesday with the internationally-exposed FTSE 100 benefitting from sterling weakness, as the UK fast-tracked the emergency use of coronavirus vaccines.

Vaccination against Covid-19 will begin early next week after the UK became the first country in the world to approve a jab from US pharma giant Pfizer and its German partner BioNTech.

Pfizer shares were up 3.5% in New York.

The vaccine has been shown in studies to be 95% effective and works in all age groups. The UK has ordered 40 million doses of the Pfizer vaccine, enough to vaccinate 20 million people with two doses, given 21 days apart.

UK Health Secretary Matt Hancock said 800,000 doses of the jab will arrive next week, with millions more arriving in the coming weeks.

Further, BioNTech's Sean Marett said the UK was likely to receive at least five million doses of vaccine by the end of year.

The FTSE 100 index closed up 78.66 points, or 1.2%, at 6,463.39. The mid-cap FTSE 250 index closed up 32.96 points, or 0.2%, at 19,877.77. The AIM All-Share index closed up 2.13 points, or 0.2% at 1,067.07.

The Cboe UK 100 index closed up 1.1% at 643.27. The Cboe 250 ended flat at 17,158.92, and the Cboe Small Companies finished up 0.4% at 11,515.40.

In Paris the CAC 40 ended flat, while the DAX 30 in Frankfurt ended 0.5% lower.

IG Group's Chris Beauchamp said: "The FTSE 100's ascent continues, helped today by a reversal in the sterling strength that has been such a feature of the past few weeks. It is not hard to guess the cause of this change, as Brexit talks drag on without any sign of progress and the rhetoric from some European capitals becomes increasingly more strident. But whatever the cause, it has allowed the FTSE 100 to move back above 6400, putting it back on the cusp of another break to the upside.

"Overall stock markets continue to hold up well, even if they continue to search in vain for a real catalyst to drive them higher after November's huge rally. As the UK's vaccine news shows, things are moving in the right direction, which should continue to support risk, but with the news very much in the price it is a question of where the next big story comes from."

In the FTSE 100, London Stock Exchange Group ended the best performer, up 9.6% after Reuters reported the stock exchange operator is set to win EU antitrust approval for its USD27 billion acquisition of data analytics company Refinitiv.

The news agency reported LSEG tweaked concessions to address competition concerns, according to people familiar with the matter. The sources declined to provide details of the changes, Reuters added.

BP ended up 4.7% after JPMorgan added the UK oil major to its European Analyst Focus List.

Royal Dutch Shell 'A' and 'B' closed up 3.8% and 1.8% respectively after JPMorgan upgraded the oil major to Overweight from Neutral.

Brent oil was quoted at USD47.90 a barrel at the equities close, up from USD47.23 at the close Tuesday, ahead of a virtual meeting between OPEC and other major oil producers on Thursday.

"The ongoing OPEC+ meeting is proving to be one of the more difficult in recent memory. I still expect the producers club to recognize what is at stake: ie, a 10% slash in prices and that Thursday's meeting will achieve the outcome necessary to support oil prices. Still, the tensions that have come to the fore this week show how difficult it will be to balance the competing interests within OPEC+ in the future," said AxiCorp's Stephen Innes.

At the other end of the large caps, J Sainsbury closed down 2.9% and WM Morrison Supermarkets ended down 2.3%.

The supermarket chains were lower after rival chain Tesco said it will repay GBP585 million of business rates relief received from the UK government as a result of the Covid-19 pandemic. Tesco closed down 1.9%.

"The decision by Tesco to pay back business rates relief represents a significant U-turn and will crank up the pressure on its supermarket rivals to follow suit," said AJ Bell's Russ Mould.

The pound was quoted at USD1.3343 at the London equities close, down from USD1.3425 at the close Tuesday, as ongoing Brexit negotiations between the UK and Europe remain at an impasse.

The EU's chief Brexit negotiator Michel Barnier warned Wednesday he can not guarantee he will strike a trade deal with Britain, diplomats said, and the next few days will be crucial.

"We are quickly approaching a make or break moment in the Brexit talks," Barnier told a video meeting of European envoys, a diplomat said, in an account of the video talks confirmed by other sources.

"Intensive negotiations are continuing in London, but as of this morning it is still unclear whether negotiators can bridge the gaps on issues like level playing field, governance and fisheries," Barnier said.

Diplomats said Barnier thought the outcome of the eight months of talks would be decided in the next few days, possibly late on Thursday or Friday. UK officials do not recognise a formal deadline, but privately agree the next few days could be crucial.

One European diplomat said there was "frustration" among the member state envoys and that "for the moment, we're still not there."

Failure to clinch a deal would cause deep economic disruption between the two sides at a time when the European economy is already deep in a downturn due to Covid-19.

"The pound has been hit hard on the news that Michel Barnier has notified the EU27 that a no-deal scenario is looking increasingly likely. While traders have largely taken running commentary with a pinch of salt thus far, the growing fear of a disorderly exit at the end of the month is likely to drag on the pound in the absence of a deal. With three issues remaining for negotiators to overcome, it seems we have reached a standstill in talks at a critical time," said IG Group's Josh Mahony.

The euro stood at USD1.2086 at the European equities close, up from USD1.2045 late Tuesday.

The EU is embroiled in a dispute with members Hungary and Poland over conditions over the rule of law that the bloc intends to attach to the recovery funds.

Brussels is currently investigating the governments of Hungary and Poland for undermining the independence of their judiciaries and media and had sought to attach certain conditions to the disbursement of EU cash.

In turn, Hungary and Poland have stood firm after vetoing the EU budget and rescue funds last month, arguing no such rule-of-law-conditions can be attached unless the bloc changes its founding treaty.

"One possible catalyst for push higher would be the final approval of the EU pandemic bonds package which has been held hostage by Poland and Hungary over rule of law clauses. There is now talk amongst the major EU economies of cutting the two former Soviet Union satellites out of the package altogether as a means of pressuring them to come on board. Although there is no legal way for the EU to cut out funding for member states, the EU does have the power to prioritise spending and could create a de facto freeze which would put a massive strain on the two east European nations budgets," explained analysts at BK Asset Management.

Against the yen, the dollar was trading at JPY104.57, up from JPY104.40 late Tuesday.

Stocks in New York were lower at the London equities close, pulling back from record highs reached on Tuesday, following disappointing US jobs data.

The DJIA was down 0.3%, the S&P 500 index down 0.2% and the Nasdaq Composite down 0.4%.

US private sector employment increased by less than expected in November amid a resurgence of coronavirus infections, figures from payroll processor ADP showed.

Private sector employment increased by 307,000 jobs in November, below October's revised reading of 404,000 and undershooting expectations of 410,000, according to consensus cited by FXStreet.

The figures come ahead of Friday's closely-watched Labor Department jobs report.

On the corporate front, Dow component Salesforce.com was down 7.5% after the business software firm agreed to acquire Slack Technologies for a hefty USD27.7 billion.

Gold was quoted at USD1,827.01 an ounce at the London equities close, higher against USD1,811.03 late Tuesday.

The economic events calendar on Thursday has services PMI readings from Germany, eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively. In the afternoon, US jobless claims figures are at 1330 GMT.

The UK corporate calendar on Thursday has annual results from housebuilder Countryside Properties and stockbroker AJ Bell.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Sainsbury (J) PLC 246.00 GBX 0.41
BP PLC 290.00 GBX -1.14
Morrison (Wm) Supermarkets PLC 186.80 GBX 0.92
Royal Dutch Shell PLC B 1,359.60 GBX -1.25
London Stock Exchange Group PLC 9,120.00 GBX -0.57
Tesco PLC 241.90 GBX -0.08
Royal Dutch Shell PLC Class A 1,420.00 GBX -1.17
Pfizer Inc 36.55 USD 0.19
Salesforce.com Inc 225.77 USD 1.62

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