FTSE 100 closes lower on final full-day session of annus horribilis 2020

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  • FTSE 100 closes nearly 47 points lower
  • Brexit Bill passing in parliament ignored
  • AstraZeneca/Oxford vaccine approved by UK regulators

4.50pm: Down-day on final full-session of 2020


The FTSE 100 closed in the red on Wednesday in spite of morning gains in New York, the Brexit Bill passing in the UK parliament, and positive coronavirus vaccine news, as investors started to square their positions ahead of the half-day New Year’s Eve session tomorrow.


The UK blue-chip index closed down 46.83 points, or 0.7% at 6,555.82, only just above the session low of 6,552.466, and well below the early peak of 6,622.98.


Around London’s close, the Dow Jones Industrial Average was up 160.43 points, or 0.5%, at 30,496.10, while the S&P 500 index gained 0.3% and the Nasdaq Composite rose 0.4%.


Joshua Mahony, senior market analyst at IG, commented: “UK stocks are on the back foot despite the passing of the Brexit Bill, putting to bed fears of a no-deal Brexit when the UK leaves the EU on Thursday night.


“Unfortunately it appears to be the case of a buy-the-rumour, sell-the-fact scenario. Despite allaying fears of a no-deal scenario, we are instead facing up to the fact that the UK is facing months of economic instability.”


Mahoney added: “With the government shifting a further 20 million people into Tier 4 tomorrow, 78% of the country will be operating under restrictions that severely hinder economic activity. With a record 53,000 new cases yesterday, the UK remains on a sharp upward trajectory with no sign of turning the corner. The fear is that without a swift reversal in cases, there is a strong chance that the government either lengthens or tightens restrictions further.”


But he continued: “The outlook for 2021 looks positive given today’s UK approval of the crucial AstraZeneca/Oxford vaccine. With the government having ordered 100 million doses of the cheap and easily stored product, there is a hope we will see a sharp ramp-up in vaccinations in the months ahead.


“While the vaccine requires two-doses for long-term protection, the ability to substantially shield patients with the first jab allows for a huge initial roll-out in the UK. Much of 2021 will be dominated by a perception of just how swiftly we can remove restrictions and allow businesses to get back to some semblance of normality.


“The rollout will be heavily influenced by just how quickly the government can obtain the product. With both Pfizer and AstraZeneca products now available for the NHS to administer, we are looking at a dramatic ramp-up in the speed to inoculation throughout the UK.”


3.05pm: Wobbles ahead of New Year’s Eve


The FTSE 100 index was trading lower mid-afternoon on Wednesday in spite of an early advance on Wall Street as investors started to square their positions ahead of New Year’s Eve, which is just a half-day session in London.


The UK blue-chip index was down 24 points, or 0.4% at 6,578.70, just off the session low of 6,575.48 and well below the opening peak of 6,622.98.


US stocks opened higher on Wednesday as coronavirus (COVID-19) vaccine rollouts and hope for final approval of a bigger US stimulus package fuelled expectations the world-biggest economy will recover from the pandemic slump in 2021.


After around half an hour of trading in New York, the Dow Jones Industrial Average was up 137.66 points, or 0.5%, at 30,473.33, while the S&P 500 index and the Nasdaq Composite both gained 0.4%.


Michael Hewson, chief market analyst at CMC Markets UK, commented: “As we come out of the other side of this year’s economic shock, it’s interesting to note that forward inflation expectations are higher than they were at the end of last year. Given the deflationary shock that has just hit the global economy, this is a little surprising to say the least.


“The extent of the economic damage that is yet to manifest itself as a result of the changes to the global economy are likely to take place over the next five years.”


12.35pm: Free-wheeling towards New Year


The FTSE 100 index was back almost flat around midday on Wednesday, eyeing direction from the restart on Wall Street, with US stocks hoping to try another assault on recent record highs amid further coronavirus vaccine new.


The UK blue-chip index was up just 2 points at 6,604.61, having recovered from a low of 6,598.30, but well below the opening peak of 6,622.98.


AstraZeneca and Oxford University’s coronavirus vaccine became the second to be approved by Britain on Wednesday., while European Union countries have begun rolling out Pfizer and BioNTech’s vaccine this week.


The United States also detected its first-known case of the new, highly infectious coronavirus strains already spotted in Britain and South Africa.


In New York, S&P 500 futures were up around 0.4%, having shed 0.2% on Tuesday, with similar performances seen from the Dow Jones Industrials Average and Nasdaq Composite.


US stocks had retreated from an intraday record on Tuesday after Senate Majority Leader Mitch McConnell put off a vote on President Donald Trump’s call to increase coronavirus (COVID-19) relief checks. Although many Republican Senators remain adamantly opposed to increasing relief payments, support is growing among them, including two from Georgia, who are running in crucial races that will determine who will control the Senate.


The Senate is also due to hold a procedural vote on Wednesday that could pave the way for Congress to override President Trump’s veto of a key defense bill, as tension between the outgoing Republican president and party leaders grows.


Trump on Tuesday ramped-up pressure on his fellow Republicans to support his decision to veto the bill because it does not repeal certain legal protections for tech giants, and to back $2,000 one-time stimulus checks for struggling Americans.


On currency markets, the dollar’s weakness continued dropping again on Wednesday, the first day where settlement of trades will be in 2021.


Meanwhile, Bitcoin on Wednesday jumped to a record $28,599.99, after the digital currency almost quadrupled in value this year amid heightened interest from bigger investors.


The world’s most popular cryptocurrency was last up 2.3% at $28,012. It has surged by nearly half since breaking $20,000 for the first time on December 16.


10.10am: FTSE 100 struggles higher


Heading into mid-morning, the FTSE 100 has advanced slightly from its mostly flat start, adding 19 points to reach 6,622 shortly after 10am.


One segment of the blue-chip index having a good morning were the UK’s largest banks, with Natwest Group PLC (LON:NWG) leading the risers with a 2.7% rise to 167.8p while Lloyds Banking Group PLC (LON:LLOY) climbed 2.3% to 37.6p, Standard Chartered PLC (LON:STAN) ascended 2.1% to 478.8p and Barclays PLC (LON:BARC) was up 2% at 152.2p.


Brexit trade deal optimism may be giving the financial another lift this morning as the deal moves through the legislative channels in the UK and the EU, while a rise in house prices of 0.8% month-on-month in December may have lifted hopes of increased mortgage lending as buyers continue to take advantage of the stamp duty holiday.


8.45am: Footsie makes sluggish start


The FTSE 100 has made a fairly subdued start to Wednesday’s session as investors seemed content to take a breather despite the news of the AstraZeneca/Oxford vaccine being approved by UK regulators.


Shortly after 8.30am, the blue-chip index was up around 9 points at 6,611, with Pershing Square Holdings Ltd (LON:PSH) at the top of the risers with a 2% gain to 2,585p while Guinness owner Diageo PLC (LON:DGE) was the biggest faller after sliding 1% to 3,016p.


Despite the slow start for the FTSE 100, the news of the vaccine approval has provided a small boost for AstraZeneca in early deals, with the shares up 0.4% at 7,493.


The morning was also bringing good news for Bitcoin, with the original cryptocurrency once again trading at around record levels after rising 5.4% over the last 24 hours to US$27,973.


Bitcoin has been one of the biggest winners of 2020, having almost quadrupled in value since the start of the year as investors began to look more closely at the digital currency as a hedge against the volatility of the stock markets brought on by the pandemic.


7.30am: FTSE 100 to open little changed


The FTSE 100 is expected to open little changed on Wednesday morning as traders take a breather following Tuesday’s surge.


Spread-better IG expects the FTSE 100 to start around 7 points higher after ending Tuesday’s session with a 100 point gain to 6,602, its highest level since early March.


Expectations of a flat open followed a negative performance for Wall Street overnight, with the Dow Jones Industrial Average closing down 0.22% at 30,335 while the S&P 500 dropped 0.22% to 3,727 and the Nasdaq fell 0.38% to 12,850.


Trading was more mixed in Asia this morning, with Japan’s Nikkei 225 down 0.45% while Hong Kong’s Hang Seng rose 1.5%.


While the FTSE 100 is set for a muted start, there could be some news that may drive the market higher despite the seasonally quiet trading period, particularly following recent news that the UK regulator has approved a coronavirus vaccine made by AstraZeneca PLC (LON:AZN) and the University of Oxford, increasing the chances of mass vaccinations of the British population amid a surge in cases of the virus.


Around the markets:


  • Sterling: US$1.35, up 0.3%
  • Brent crude: US$51.40 a barrel, up 0.6%
  • Gold: US$1,881 an ounce, up 0.22%
  • Bitcoin: US$28,422, up 8.4%

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