FTSE 100 falls as doubts set in about coronavirus drug
The FTSE 100 has fallen amid doubts about a drug that was touted as a possible coronavirus treatment and as the economic toll of the outbreak becomes clearer.
Britain’s FTSE 100 stock index had fallen 0.7 per cent to 5,784 points in the afternoon session. The FTSE 250 of mid-cap companies was 0.1 per cent lower.
European markets were also trading lower. The continent-wide Stoxx 600 index was 0.3 per cent down. Germany’s Dax and France’s CAC 40 were both off by 0.9 per cent.
Stocks were boosted last week amid hopes a coronavirus treatment could soon be found. A medical news website said the drug remdesivir from US pharmaceuticals firm Gilead had helped the majority of coronavirus patients it had been tried on in a Chicago hospital.
However, US stocks ran out of steam yesterday and European equities have dipped today after another report said the drug had failed to help severely ill patients in the first clinical trial.
Gilead said the trial’s results were inconclusive because it was terminated early.
US stocks rose slightly in early trading after finishing roughly flat yesterday. The S&P 500 was up 0.3 per cent. The Dow Jones was 0.1 per cent higher and the Nasdaq had risen 0.3 per cent.
Charalambos Pissouros, senior market analyst at JFD Group, said the early trial of the Gilead drug had “erased hopes” that a workable treatment “is on the cards”.
He added that it “may have revived fears that the virus could start spreading fast again if the ‘stay at home’ measures are lifted too soon”.
Economic woes weigh on investors and FTSE 100
European investors were also left underwhelmed by an EU meeting yesterday about a joint coronavirus recovery effort, said David Madden of CMC Markets.
“EU summit unsurprisingly ended with no real progress on a recovery fund that would help rebuild the shattered economies of the weaker European economies,” he said.
“There was no real detail on how much of any new fund was likely to be made up of loans and grants, and more importantly how big it was likely to be.”
Yet another raft of dire economic data also weighed somewhat on investors. However, markets have paid relatively little attention to signals from the real economy in recent weeks.
European and US purchasing managers’ index (PMI) surveys also crashed to record lows as service sectors imploded. They are closely watched gauges of economic health.
In the oil markets, Brent crude, the international benchmark, was up one per cent at $21.60 per barrel in the afternoon session. WTI crude, the US benchmark, was three per cent higher at $17 per barrel.
The pound was down roughly flat against the dollar at $1.234.
The biggest fallers on the FTSE 100 and 250 indices today were firms in sectors hardest-hit by coronavirus, such as travel, industry and retail.
British Airways owner IAG dropped 3.8 investors considered the prospect of a pandemic lasting longer than initially hoped.
Aerospace firm Meggitt dropped roughly 4.7 per cent and luxury brand Burberry fell 3.4 per cent.