ADVFN Morning London Market Report: Monday 23 November 2020

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London open: Stocks rise on vaccine news but stronger pound limits gains

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London stocks rose in early trade on Monday following positive news on AstraZeneca’s Covid-19 vaccine, as investors awaited news on how England will come out of lockdown next week.

At 0855 GMT, the FTSE 100 was up 0.5% at 6,382.00. The UK index was underperforming its European peers, however, as sterling gained 0.5% against the dollar to 1.3347 amid expectations that a Brexit deal will be agreed this week.

A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.

Vaccine news lifted the mood as AstraZeneca said its Covid-19 vaccine was highly effective in preventing the virus and that it would move quickly to get approval for use. An interim analysis of clinical trials of AZD122 in the UK and Brazil showed the vaccine had an average efficacy of 70% with protection occurring 14 days or more after two doses. One of the dosing regimens was about 90% effective, putting it on a par with other vaccines.

There were no serious safety incidents related to the vaccine and AZD122 was well tolerated, AstraZeneca said.

The UK has secured early access to 100m doses of the AstraZeneca vaccine, along with 255m doses from other developers.

Spreadex analyst Connor Campbell said: “At a glance the headline from the University of Oxford trial seems a tad disappointing. The study showed an average 70.4% efficacy compared to the 90% and 95% of the Pfizer and Moderna preparations respectively.

“However, dig into the numbers and things look brighter – a half dose produced 90% efficacy when followed by a full dose at least once month later.

“Whichever way you slice it, the science is continuing to move in the right direction, with three major vaccines almost ready to go. Pfizer seems first in line, with The Telegraph reporting that the company’s joint venture with BioNTech could be given UK regulatory approval this week – that’d be before the US, where the FDA won’t meet until December 10th to discuss authorisation.

“While nowhere near as explosive as the growth that greeted that first Pfizer/BioNTech headline, Europe nevertheless looked healthy on Monday.”

Market participants were also awaiting a speech by Prime Minister Boris Johnson later in the day, in which he is expected to announce that non-essential shops and gyms will be able to reopen in all areas once lockdown ends on 2 December. According to reports, parts of the three-tier system will be tougher, but the 2200 GMT closing time for pubs and restaurants will be relaxed. In addition, mass testing will be introduced in all tier three areas, with the rapid testing currently being used in Liverpool set to be part of the stricter system.

Unsurprisingly, travel and leisure stocks were the best performers, with British Airways parent IAG, engine maker Rolls-Royce, caterer Compass, GKN owner Melrose, travel company TUI, pub group Mitchells & Butlers, budget airline easyJet and upper crust owner SSP all higher.

The travel sector also benefited from news that ministers have approved a plan to cut travel quarantine next week to just five days from 14 days. Under a ‘test and release’ scheme set to be introduced next month, travellers will have to quarantine for five days before being tested. If the test result is negative, their isolation will end immediately.

BP and Royal Dutch Shell gushed higher as oil prices rallied, with Brent crude hitting its highest level since early September.

Cineworld surged as the embattled cinema chain said it had secured a new $450m debt facility and that its lenders have agreed to waive its debt covenant until June 2022 to help see it through the Covid-19 pandemic.

Aviva gained after agreeing to sell its 80% stake in its Italian life insurance joint venture to its partner UBI Banca for €400m (£356m) in cash.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Tui Ag +9.12% +39.80 476.20
2 Easyjet Plc +4.99% +36.60 769.40
3 International Consolidated Airlines Group S.a. +4.24% +6.70 164.55
4 Carnival Plc +3.31% +38.50 1,201.50
5 Rolls-royce Holdings Plc +2.78% +2.76 102.20
6 Bp Plc +2.76% +6.75 251.15
7 Royal Dutch Shell Plc +2.76% +33.00 1,229.80
8 Glencore Plc +2.69% +5.24 200.30
9 Marks And Spencer Group Plc +2.68% +3.55 136.15
10 Royal Dutch Shell Plc +2.41% +30.00 1,274.80

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Pearson Plc -2.33% -14.80 620.20
2 Astrazeneca Plc -1.96% -163.00 8,154.00
3 Morrison (wm) Supermarkets Plc -1.37% -2.55 183.90
4 Bt Group Plc -1.31% -1.60 120.70
5 Admiral Group Plc -1.09% -32.00 2,899.00
6 Scottish Mortgage Investment Trust Plc -1.04% -11.00 1,049.00
7 Tesco Plc -0.99% -2.30 230.40
8 Croda International Plc -0.96% -60.00 6,220.00
9 Glaxosmithkline Plc -0.92% -12.80 1,380.80
10 British American Tobacco Plc -0.92% -25.50 2,754.50

 

Monday newspaper round-up: Public sector pay freeze, dividends, Blackmore

Rishi Sunak has rejected accusations that his planned public sector pay freeze amounts to a return of austerity and insisted that spending plans to be announced on Wednesday will result in more money for health, education and the police. With trade unions demanding that the chancellor do a last-minute U-turn over his clearly signalled intention to clamp down on the state’s wage bill and refusing to rule out strikes, Sunak said there would be significant increases in spending on public services next year. – Guardian

The economic turmoil caused by the Covid-19 pandemic pushed third-quarter shareholder payouts to their lowest level since 2016, according to the latest snapshot, with the UK recording the biggest falls. Janus Henderson is now warning that dividends for the whole of 2020 are likely to drop at least 15.7%, which would “eradicate” more than three years of dividend growth and cost investors $224bn (£170bn) in lost income this year. – Guardian

The effective renationalisation of the railways has been accelerated after ministers put the industry’s future in the hands of Network Rail and a group of government officials, leaving private sector train operators by the wayside. Grant Shapps, the Transport Secretary, has asked Andrew Haines, the Network Rail chief, to spearhead a 30-year strategy for the railway called the “The Whole Industry Strategic Plan” (WISP), according to leaked internal documents seen by The Telegraph. – Telegraph

Thousands of small investors who put almost £47 million into unregulated minibonds sold by Blackmore have been warned to expect nothing back after the collapse of the property developer. The disclosure by administrators at Duff & Phelps will add to the furore surrounding Blackmore, which failed in April with only £906 of cash in its bank account. – The Times

One of Britain’s leading restaurateurs has urged the government to abandon blanket Covid-19 restrictions or face “an atomic bomb” of unemployment in January. Richard Caring, who owns chains including Bill’s and The Ivy Collection, said rules that had been “put in place without a great deal of thought” had turned out to be “a killer” for the hospitality industry. – The Times

 

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