FTSE 100 falls as rising coronavirus cases dent optimism
The FTSE 100 slipped in morning trading as investors weighed rising coronavirus cases in the US and Hong Kong against hopes that a vaccine may soon be found.
London’s main stock index dropped 0.7 per cent to 6,246 points. The FTSE 250 index of slightly smaller companies fell 0.2 per cent.
Germany’s Dax rose 0.4 per cent as talks over an EU coronavirus recovery fund made headway. The continent-wide Stoxx 600 was flat but France’s CAC 40 was 0.2 per cent lower.
Markets were mixed overnight in Asia. China’s CSI 300 jumped three per cent but Hong Kong’s Hang Seng fell 0.2 per cent. Japan’s Nikkei rose 0.1 per cent.
Coronavirus continued to tear through the US at the weekend, with more than 67,000 new cases on Sunday. Deaths are rising quickly too, with 877 yesterday.
Eric Garcetti, mayor of Los Angeles on the US’s west coast, warned the city may have to reinstate stay-at-home orders.
Hong Kong cases rose by a record 108. The semi-autonomous city will now require civil servants to work from home and make everyone wear a mask in shared indoor areas.
Investors are worried that rising cases and new lockdowns could derail the nascent global economic recovery.
Jim Reid of Deutsche Bank said the weekly US initial jobless claims would be a “data highlight of note” this week. It will show whether the reimposition of lockdowns in some parts of the country are having an economic effect.
FTSE 100 could be lifted by vaccine
The euro rose 0.3 per cent against the dollar to $1.146 after the talks of a European Union coronavirus bailout funds made headway this morning.
The four “frugal” countries of the Netherlands, Austria, Denmark and Sweden have agreed to have €390bn of a huge bailout fund disbursed as grants to countries most in need, Bloomberg reported.
Yet that was not enough to boost all European stocks. David Madden, market analyst at CMC Markets, said: “Traders shrugged off the fact that things appear to be heading in the right direction as the gulf between the two sides has narrowed.”
“Some progress has been made, which is encouraging, and negotiations are expected to carry on this afternoon. The EU has a track record of a lot of in-house haggling. But in the end a deal is usually struck.”
FTSE 100 investors eagerly await the results of an early trial of Astrazeneca’s coronavirus vaccine. They should be published in the Lancet journal today.
Reports last week suggested it had shown positive results. Stocks could be further boosted by confirmation today.
Fiona Cincotta, market analyst at City Index, said the trial “could drive sentiment and the market” given there is “little on the economic calendar to keep investors entertained today”.
Oil prices slipped slightly as investor sentiment dipped. Brent crude was down 0.8 per cent at $42.70. WTI crude was also 0.8 per cent lower at $40.30
Jeffrey Halley, senior market analyst at currency firm Oanda, said: “The risks of a second Covid-19 torpedo to world growth grow increasingly likely by the day.”