Friday 27 November 2020 3:18 pm

US stocks hit all-time high but FTSE 100 lags

US stock markets hit fresh all-time highs despite the thin post-thanksgiving trading, while the FTSE 100 lagged behind amid worries about Brexit and the economy.

Wall Street’s S&P 500 rose 0.3 per cent in the early part of the session. The Dow Jones climbed 0.2 per cent while the Nasdaq jumped 0.9 per cent. All three indices reached new heights thanks to optimism about coronavirus vaccines and more clarity about the presidential election.

Read more: Astrazeneca mulling extra vaccine trial to ‘validate’ efficacy after results confusion

In the UK, the FTSE 100 eked out a gain of 0.1 per cent, having spent much of the day in the red.

Germany’s Dax rose 0.4 per cent while France’s CAC 40 was up 0.7 per cent. The European Stoxx 600 was 0.3 per cent higher.

Taken as a whole, global stocks remained on course for their best month ever. Drug companies Moderna, Pfizer and Biontech lit a fire under equities this month by announcing that their coronavirus vaccines are more than 90 per cent effective.

With strong hopes that normal life can return next year, investors piled into sectors such as financials and industrials that the pandemic has battered.

The FTSE 100 has benefitted from what investors are calling the “reflation trade”. Rising energy prices and bond yields have helped the oil and bank-heavy index.

FTSE 100 lags behind peers

However, the underperformance of UK equities today was in part driven by worries over the Astrazeneca/Oxford University vaccine. 

The group announced positive results earlier this week. But Some question marks about the data have led the company to mull an extra trial. Shares in Astra have slipped slightly today.

Chancellor Rishi Sunak also delivered a bleak assessment of the economy this week. He said it was set to contract 11.3 per cent this year. Meanwhile, firms are increasingly worried about the end of the Brexit transition period in December.

“Markets are very relaxed still about the prospects of a deal, with the pound remaining near two and a half year highs against the dollar,” said Craig Erlam, senior market analyst at Oanda. 

Yet he noted that minor concerns meant “the FTSE is a little lower today and underperforming its peers in Europe”. 

Despite the focus on the reflation trade, all three US indices continue to hit all-time highs. A key reason is that President Donald Trump is gradually accepting his election defeat.

Read more: Tiers are here to stay until vaccine rollout, says minister

Joshua Mahony, senior market analyst at IG, said: “Political risk out of the US is all but gone after Donald Trump admitted he would concede if the electoral vote is confirmed in favour of Joe Biden.

“There is little hope of the president reversing a comprehensive victory from Biden. And the prospect of a peaceful handover alleviates some of the underlying risk for markets.”

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