FTSE 100 closes higher after upbeat UK earnings
The FTSE 100 recovered from an early fall to close in the green after a day of positive quarterly earnings, although residual fears over coronavirus and new restrictions remain.
London’s blue-chip index fell 0.3 per cent but crept back through the day to close up by the same margin at 5,899 points. The FTSE 250 was up half a per cent as markets shut.
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The recovery meant the FTSE outperformed its European counterparts in a quiet day of trading, with Germany’s Dax was 0.7 per cent lower and the French CAC down 0.1 per cent.
CMC Markets analyst David Madden said: “Overall, there hasn’t been too much excitement in the markets today.
“Restrictions in some countries, because of the health crisis, are tighter and with the way things are going in terms of the number of new coronavirus cases, there are fears that further restrictions could be in the offing.”
All across Europe governments are battling new outbreaks of coronavirus.
In the UK, Liverpool and Lancashire have been placed under the tightest so-called tier three restrictions.
The government looks set to force Manchester into the highest tier in short order, with talks between the two sides ending without agreement.
“More and more countries are reacting to the unchecked increase in new infections with a drastic tightening of corona restrictions,” said Bernd Weidensteiner of Commerzbank in a note.
Earnings boost FTSE 100
Despite worries over the virus and geopolitics, the FTSE 100 ticked higher, helped by company earnings and testing developments.
British Airways-owner IAG was the biggest riser. It gained 7.1 per cent after one-hour coronavirus testing began at Heathrow airport.
The tests – which for now cover passengers to Hong Kong and Italy – are something the airline industry has long called for.
Dettol-maker Reckitt Benckiser rose 0.5 per cent after it posted a larger-than-expected jump in quarterly sales.
On the FTSE 250, Britvic jumped 6.6 per cent after it forecast profit ahead of expectations.
Nonetheless, the mood was febrile, with a feeling among investors that the Covid battle and economic recovery are at a crossroads.
Russ Mould, investment director at AJ Bell, said: “One minute, optimism about economic recovery is high, the next it’s doom and gloom.
“Markets are overreacting to every data point, news update or speculation, meaning that prices are swinging up and down.”
Stimulus talks stay in focus as Wall Street opens
The new restrictions across Europe – such as a curfew in French cities and the closure of restaurants in Ireland – have worried investors.
A stimulus bill in the world’s largest economy would cheer global investors and spill over into indices like the FTSE 100. But US lawmakers remain at odds over the size of the package.
US markets opened higher today after yesterday’s sell off, with the S&P 500, Dow Jones and Nasdaq all up 0.6 per cent.
Netflix is due to post its third quarter results later today, with all eyes on whether the streaming giant will continue its rapid increase in subscriber numbers.
By the half year, the firm had added 25.8m new customers. Across the whole of 2019, that figure stood at 27.8m.
Yesterday, speaker of the house Nancy Pelosi’s spokesperson said the two sides “continued to narrow their differences”. Yet time is running out to sign a deal before the 3 November presidential election.
Fiona Cincotta, market analyst at City Index, said: “Whilst the two sides are narrowing their differences, differences still remain and the deadline is later today.
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“The likelihood of a deal being achieved before the 3 November 3 election is slipping lower.”
The pound was up 0.2 per cent at $1.297 this morning. Traders continued to bet that the UK’s no-deal Brexit rhetoric is a bluff.