Wall Street opens higher but FTSE 100 slips as virus cases continue to rise
Wall Street opened higher this afternoon as upbeat earnings from major companies helped markets shrug off concerns about rising Covid-19 cases.
The S&P 500, Dow Jones and Nasdaq were all trading up roughly 0.8 per cent this afternoon.
US stocks had seen their rally halted yesterday as investors weighed the timeline for a mass rollout of a coronavirus vaccine.
But better-than-expected earnings from Disney and Cisco last night helped to buoy market confidence.
However, the FTSE 100 was back in the red today as investors turned their attention back to rising Covid-19 cases after a vaccine-related rally earlier in the week.
London’s blue-chip index slipped 0.72 per cent as markets opened, before paring back some losses to trade 0.36 per cent lower at 6,316 points shortly after 3pm.
It follows on from losses yesterday, when the FTSE ended an eight-day winning streak to close in the red.
Markets had soared at the beginning of the week after pharma giant Pfizer announced its Covid-19 vaccine had proved 90 per cent effective during trials.
But the rally has run out of steam amid a continued rise in infections, while disappointing GDP figures yesterday also cast doubts over the UK’s economic recovery.
Elsewhere in Europe, Germany’s Dax and French benchmark Cac 40 both ticked up just over 0.3 per cent.
Political uncertainty
In addition to fears over rising Covid-19 cases, markets have also been rocked by growing political uncertainty.
Investors are keeping a nervous eye on Brexit developments as the transition period deadline of 31 December gets ever nearer.
“The wave of optimism which washed over the financial markets has begun to ebb away as anxieties over a Brexit deal take hold once again,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Landsown.
Markets are also reacting to the departure of No 10 director of communications Lee Cain and the expected resignation of top Boris Johnson advisor Dominic Cummings.
“The expected departure of two of Boris Johnson’s top advisors has added to the cloud of uncertainty which has been gathering over concerns trade negotiations could be heading for fresh deadlock,” Streeter added.
Markets ‘at a crossroads’
The reversal of fortunes for equities towards the end of this week shows investors grappling with the outlook for the pandemic.
The atmosphere was bullish at the beginning of the week after Pfizer released its optimistic vaccine update.
But central banks have since warned that a vaccine alone is not enough to solve the economic woes, while outlooks for recovery remain tentative.
A large increase in oil inventories has also sparked a fall in oil prices, pushing down Shell and BP.
Neil Wilson, chief market analyst at Markets.com, said markets were “at a crossroads”.
“Whilst there is great hope for next year because of the vaccine, we are from out of the worst of the pandemic – US cases are surging at record levels and lockdown measures persist in Europe,” he said.
“Airlines and travel fell sharply as profits were taken after some very large moves this week. The question for investors is whether they think there are enough incremental buyers on the side lines to drive markets higher.”
In the US, attention is still focused on any signs of progress in agreeing a fresh coronavirus stimulus package.
But AJ Bell investment director Russ Mould warned turmoil sparked by the presidential election would hamper efforts.
“Given the political backdrop of a disputed election outcome the chances of anything being signed off in the final quarter of the year seem to be slim at best.”