Friday 18 December 2020 3:24 pm

FTSE 100 and US stocks slip as market optimism dips

The FTSE 100 fell along with European and US stocks as optimism faded on trading floors, with doubts creeping in about a US stimulus bill and fresh tensions with China.

London’s main stock index was down 0.2 per cent in the afternoon session to 6,539 points. The FTSE 250, which is more domestically focused, fell 0.7 per cent.

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The FTSE 100 was held up somewhat by a falling pound, which helps the overseas earnings of the index’s companies. Sterling dropped 0.8 per cent to $1.348, after trading at more than two-year highs on Wednesday and Thursday.

Michael Hewson, chief market analyst at CMC Markets, said markets were taking stock of “uncertainty about the timing of a US stimulus deal and an EU/UK trade deal, prompting some lightening of positions heading into the weekend”.

On the FTSE 100, retailers JD Sports, Next, B&M, Tesco and Associated British Foods all fell. It came after figures showed retail sales dropped 3.8 per cent month on month in November, when England was in a month-long lockdown.

However, more internationally focused firms benefitted. They included Coca-Cola HBC, Rio Tinto, and Intercontinental Hotels.

US stocks and FTSE slip with stimulus bill uncertain

In Europe, Germany’s Dax was flat after spending the morning in the green. France’s CAC 40 was down 0.4 per cent and the European Stoxx 600 was 0.2 per cent lower.

US stocks slipped at the open. The S&P 500 was off by 0.4 per cent while the tech-heavy Nasdaq was 0.1 per cent down. 

The dollar gained as other major currencies like the pound and euro slipped, and as investors sought the safe-haven asset.

Sentiment on Wall Street dipped after the US Commerce Department said it will blacklist more than 60 Chinese companies to “protect US national security”. They included Semiconductor Manufacturing International Corp.

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A stimulus bill was also yet to materialise, with signs of fresh tensions. Investors have cheered progress in talks over the last few days, but the role of the Federal Reserve and aid to states have become key sticking points, according to reports.

However, markets could be boosted by the US approving Moderna’s Covid vaccine for use. This, and stimulus progress, would be likely to lift European markets like the FTSE 100, too.