Tuesday 19 May 2020 2:47 pm

FTSE 100 and US stocks slip as investor excitement cools

US stocks have followed the FTSE 100 lower as investor sentiment cools following a dramatic rally yesterday on hopes that a coronavirus vaccine may soon emerge.

Wall Street’s Dow Jones index was down 0.6 per cent shortly after the bell. The S&P 500 was 0.3 per cent lower but the Nasdaq was up 0.2 per cent.

Read more: Bank of England to name recipients of coronavirus loans

London’s FTSE 100 blue-chip index was 1.2 per cent lower at 5,975 points in afternoon trading. It rose more than four per cent yesterday.

European stocks also fell. The pan-continent Stoxx 600 was down 0.8 per cent. Germany’s Dax was 0.4 per cent lower. 

Investor sentiment has been boosted this week by countries lifting their coronavirus lockdowns. But it was a statement from drugmaker Moderna that early testing of its coronavirus vaccine had shown positive results that lit a fire under stocks yesterday.

European stock indices surged between four and six per cent higher, while Wall Street gained around three per cent.

Stephen Innes, Chief Global Market Strategist at AxiCorp, said markets are on “pause for a bit” today, “likely to reflect on the buying splurge triggered by a vaccine”.

FTSE 100 changes course

The FTSE 100 climbed in early trading but could not maintain its direction. The fall followed a weak jobs reading that gave an early sign of the economic destruction wrought by coronavirus.

The number of people without a job in Britain increased by 50,000 to 1.35m as lockdown started in March, according to official data out today.

And the number of unemployment claims under the Universal Credit benefit system jumped soared 69.1 per cent to 2.1m, the Office for National Statistics (ONS) said.

Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.

Cigarette giant Imperial Brands dragged the FTSE 100 down. Its shares plunged eight per cent after it slashed its dividend due to coronavirus.

Sterling rose 0.4 per cent to $1.224. Its climb higher was driven by the UK unveiling a plan for £30bn of tariff cuts after Brexit.

US stocks drop as oil rises

In the US, early trading was mixed as investors weighed up the latest round of corporate results.

Main street giant Walmart’s results beat expectations, sending its shares up 1.3 per cent. Yet Home Depot’s shares dropped more than two per cent as it missed analysts’ expectations for the first time in six years.

Oil prices continued their recent rally, one month on from a dramatic day on which they turned negative for the first time in history.

Brent crude was 0.8 per cent higher at $35.10 per barrel. WTI crude, the US benchmark, was up 3.9 per cent at $33.10 per barrel.

Analysts said that governments’ moves to reopen their economies were helping the WTI price avoid tumbling as the June contract expires today. 

Read more: Oil prices soar as world begins to emerge from lockdown

Craig Erlam, senior market analyst at currency firm Oanda, said: “Not only has there been no repeat of last month’s carnage, the rally has accelerated ahead of the expiry of the June contract”.

He said this was driven by “news of the vaccine and economic reopenings” which are raising demand expectations.

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