FTSE 100 records best week since April as Covid vaccine triggers hopes for economy


The FTSE 100 has recorded its strongest week since April amid rising hopes that a coronavirus vaccine can trigger a faster economic revival from the pandemic than first anticipated.

The index of leading UK company shares ended the week more than 300 points higher at 6,316, a rise of about 7%, despite a modest dip on Friday as City investors bet it would still take time to deploy the vaccine and for Britain’s economy to stage a full recovery.

Financial markets around the world have soared since Pfizer/BioNTech announced earlier this week that its Covid vaccine was 90% effective in protecting people from transmission of the virus in global trials.

Russia also said on Wednesday that its own candidate, Sputnik V, had shown in trials it could cut the likelihood of catching the disease by 92%.

However, the continued rapid spread of the virus and the start of tougher lockdown restrictions has limited gains in stock markets as the second wave of Covid inflicts a heavy toll on the global economy.

Shares in the blue-chip London index erased some of the earlier gains this week, falling by 0.4% on Friday, as optimism over the vaccine was tempered by a record number of new cases in many countries and the prospect of a difficult winter ahead before it becomes widely available.

Official figures show the UK economy grew at a record quarterly rate of more than 15% in the third quarter as lockdown restrictions were eased but that the recovery was losing momentum even before new curbs came in. The Bank of England forecasts GDP to fall again in the final three months of 2020.

READ  How has Brexit vote affected the UK economy? October verdict

Unemployment is also rising despite the government extending the furlough scheme until the end of March, with official figures this week showing the fastest increase in redundancies on record.

Eurozone GDP rose by 12.6% in the three months to September, slightly below an initial estimate of 12.7%, according to official figures on Friday.

The FTSE 100 has gained by more than 700 points since the start of the month as hopes over a vaccine and Joe Biden defeating Donald Trump in the US election lifted financial markets around the world. However, the index is still down by more than 1,000 on the start of the year, before the onset of the pandemic.

The Dow Jones Industrial Average, the leading index of US company shares, has also gained, by about 3% this week, extending a winning streak after its biggest gains since April a week earlier as Biden’s victory over Trump became clearer.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Shares on Wall Street rallied further on Friday after Biden won in Arizona, flipping control from the Republicans to the Democrats in the state for the first time since 1996. The Dow Jones was up by 1% to 29,354 on Friday afternoon.

Spot gold gained 0.8% to $1,890.81 on Friday on rising infections and increased worries about their economic impact and the speed with which vaccines might be available. However, bullion was still in line for its worst weekly loss since the end of September – down more than 3% – as a result of the initial excitement over the vaccine news.

READ  AstraZeneca sells commercial rights to two drugs in $400 million deal

Russ Mould, investment director at the Manchester-based stockbroker AJ Bell, said: “Investors’ perspective on the outlook has definitely been shifted in a positive direction by the vaccine breakthroughs and there is the promise of more news in this area in the weeks to come.

“Clearly the Covid crisis is not at an end despite the positive news announced by Pfizer and counterparts in Russia – perhaps it would be more accurate to paraphrase Churchill and say we are at ‘the end of the beginning’ of the pandemic.”



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here