The FTSE 100 and global stocks dropped as worries about rising coronavirus cases and longer-than-expected lockdowns knocked the index after positive vaccine news drove it higher yesterday.
London’s main stock index fell 0.9 per cent to 6,327 points by mid-afternoon. The FTSE 250 of slightly smaller firms also fell 0.9 per cent.
In the US, stocks were mixed as jobless claims unexpectedly rose amid soaring coronavirus cases.
Upbeat results from Moderna and Pfizer’s vaccine trials has sent the FTSE and other global stock markets soaring so far this month. Yesterday, Pfizer and Biontech released new results suggesting their vaccine is 95 per cent effective, cheering markets.
But investors are increasingly aware that the shots may not be available early enough to spare economies more pain this winter.
European stocks also dipped this morning, with Germany’s Dax fell 0.7 per cent and France’s CAC 40 moved 0.6 per cent lower. The continent-wide Stoxx 600 was down 0.7 per cent.
Wall Street’s S&P 500 slipped 0.4 per cent while the Dow Jones dipped 0.6 per cent. The tech-heavy Nasdaq rose 0.2 per cent, however.
The moves came after figures showed that claims for US unemployment benefits rose unexpectedly last week. Investors took it as a signal that the economy was in for a tough winter.
“There are definitely some fears that the lack of progress on a new stimulus aid package in the US is going to put pressure on corporates and earnings before the vaccines do their stuff,” said Neil Wilson, chief market analyst at Markets.com
“Meanwhile the virus is showing no signs of slowing down in its spread – New York now closing schools.”
Financials and industrials weigh on FTSE 100
The dollar rose 0.3 per cent against a basket of other currencies. That suggested investors are looking for safe assets. US government bond prices also rose.
Charalambos Pissouros, senior market analyst at JFD Group, said: “The Covid era is not behind us yet.
“We may experience several more months of rising infections and economic slowdown. However, the upbeat developments with regards to the vaccine suggest that the end of this crisis is approaching.”
On the FTSE 100, stocks exposed to the economic cycle dipped. Financial groups, energy firms and travel companies were the biggest fallers.
Chris Beauchamp, chief market analyst at IG, said: “Virus fears have hit an overextended global stock market this morning, knocking European equities sharply lower and pointing towards a weaker start in the US.”