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FTSE 100 set to extend retreat as early week optimism over coronavirus vaccine gives way to reality

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6.50am: Markets taking fright again

The FTSE 100 index looks set to retreat at the start on Friday, extending Thursday’s decline following three previous sessions of strong gains as the early week optimism over a coronavirus (COVID-19) vaccine gives way to the late week reality of surging hospitalisations, and rising death rates.

Spread betting firm CMC Markets expects the blue-chip index to open around 59 points lower at 6,280, having shed 43.16 points on Thursday to close at 6,338.94.

Overnight in New York, the Dow Jones Industrials Average ended 317 points, or 1.1% lower at 29,080 while the broader S&P 500 index lost 1.0%, and the tech-laden Nasdaq Composite shed 0.7%.

Asian markets were also lower on Friday, with Japan’s Nikkei 225 index down 0.6% and  Hong Kong’s Hang Seng index off 0.5%.

Jeffrey Halley, senior market analyst, Asia Pacific, OANDA commented: ”The danger when financial markets price in two years of return to normal in the space of two hours, is that there are no stragglers in the herd left to continue the momentum. That appears to be the case after the Pfizer BioNTech announcement earlier this week. It only took a day or so for some to move back to the comfort of big tech, and the lack of macroeconomic drivers since, has sapped momentum.

“A plethora of central bankers since has stated that the road ahead remains cloudy and that a vaccine won’t be an instant panacea for the world’s economic ills. Even positive noises from the US’ Dr Anthony Fauci about the Moderna vaccine, initial results of which are due soon, failed to reinvigorate the rally.

“That probably tells us that the street went all in, and then went what now, as they found themselves marooned in the portable frozen Antarctic wastes required to distribute the Pfizer vaccine. Covid-19 continues to spin out of control across the US, Europe and other parts of the globe, with the ensuing movement restrictions sure to crimp Q4 growth. Any lingering hopes of a US fiscal boost receded further overnight, as US Initial Jobless Claims fell more than expected, although they remain above 700,000.”

Diary almost bare on Friday the 13th

It is perhaps not surprising that, after a busy week for corporate news, not many companies want to bring out any statements on Friday the 13th.

There looks to be just one exception, small-cap engineering firm Castings PLC (LON:CGS) which has said it intends to announce its half-year results on the inauspicious day.

In a trading update in respect of the six month period ended September 30, 2020, published on October 6, Castings noted that it reported in August that demand from the commercial vehicle sector had increased to over 60% of pre-coronavirus (COVID-19) output levels.

Forward schedules at that time were suggesting a further increase to approximately 85%, and the group said in October that its monthly demand had hit that level.

Investors will be hoping that all of the positives have continued for the group, although in the light of another COVID-19 lockdown and the lack of progress on Brexit deals, news on current and future trading could be less optimistic, which may spook the market.

Around the Markets:

  • Pound down 0.1% at US$1.316
  • Gold up 0.2% to US$1,877.00
  • Brent Crude Oil down 1.5% to US$42.94

6.45am: Early Markets – Asia/Australia

Stocks in the Asia-Pacific region were mostly lower on Friday as the number of new COVID-19 cases in the US topped 150,000 on Thursday, eight days after 100,000 cases were found in a day for the first time.

In China, the Shanghai composite declined 1.33% while Hong Kong’s Hang Seng index dipped 0.56%.

Japan’s Nikkei 225 shed 0.53% but South Korea’s Kospi skipped the overall trend by rising 0.64%.

Shares in Australia declined, with the S&P/ASX 200 index closing 0.20% lower.

READ OUR ASX REPORT HERE

Proactive Australia news:

Comet Resources Limited (ASX:CRL) has made significant progress on the development pathway at Santa Teresa High-Grade Gold Project in Baja California, Mexico, including the release of an initial JORC-compliant mineral resource estimate.

Calima Energy Ltd (ASX:CE1) (FRA:R1Y) is encouraged by Canadian midstream sector progress in advancing gas projects despite the impacts of the COVID-19 pandemic.

Great Southern Mining Ltd (ASX:GSN) has set a development pathway for gold operations at Mon Ami in Western Australia after completing an in-house preliminary economic evaluation of the potential for an open-pit development.

Alice Queen Ltd (ASX:AQX) has received consistent gold results in resource extension drilling at the 100%-owned component of Horn Island Gold Project in Torres Strait, Queensland, with potential to increase the current inferred resource.

Galena Mining Ltd‘s (ASX:G1A) joint-venture company for the Abra Base Metals Project, Abra Mining Pty Limited (AMPL), has received a further cash investment from Toho Zinc Co Ltd to continue developing the project.

Great Boulder Resources Ltd’s (ASX:GBR) results from the second phase of aircore drilling at Blue Poles discovery within the Whiteheads project north of Kalgoorlie, has extended the total strike length to more than of 1-kilometre.

Cauldron Energy Ltd (ASX:CXU) (OTCMKTS:CAULF) (FRA:UFX) has not been sitting on its hands during Victoria’s strict COVID-19 lockdown with non-site activities progressed for the Blackwood Gold Project in the Victorian Goldfields.

Firefinch Ltd (ASX:FFX), formerly named Mali Lithium (ASX:MLL), has moved quickly to implement plans to transform the newly acquired Morila Gold Mine in Mali, Africa into a major near-term gold producing project.

MMJ Group Holdings Ltd’s (ASX:MMJ) (OTCMKTS:MMJJF) net asset value (NAV) has outshined the benchmark Alternative Harvest ETF during the four months ended October 31 2020.

Alien Metals Ltd has a diverse portfolio of commodities to develop

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