FTSE 100 turns flat over Brexit uncertainty, fading vaccine optimism, and a low services PMI

  • December 03, 2020 12:48 PM GMT
  • Team Kalkine
FTSE 100 turns flat over Brexit uncertainty, fading vaccine optimism, and a low services PMI

Summary

  • UK stock market trades flat as Brexit trade agreement uncertainty weighs
  • FTSE fails to sustain Covid-19 vaccine approval gains in the morning deals
  • UK services PMI dropped to below 50 level for the first time since June 2020

UK stock markets turned flat in the mid-morning trades after slipping into the negative territory within an hour-and-half of the trading session of market opening on Thursday, 3 December. The Brexit uncertainty over a definitive trade deal between the EU and UK bounced back after the French administration led by President Emmanuel expressed its desire for stricter terms on the UK.

Services PMI falls

The IHS Markit/CIPS UK services Purchasing Managers’ Index (PMI) tripped to 47.6 in November from the October reading of 51.4 indicating a possible decline in the business activity following the country-wide lockdown in the preceding month. The services PMI last dropped below the level of 50 in June this year.

Three-tier system

Meanwhile, England’s return to the three-tier system from December 2 after the month-long lockdown is likely to chart the market direction as businesses respond to the new arrangement. Subsequently, small and large scale enterprises have been aligning their operations with regards to the applicable restrictions as well as relaxations prescribed by the government.

Vaccine approval optimism and Brexit deal fears

The investors’ optimism led by the news of coronavirus vaccine approval by the British drug regulator seemed to have faded within a day with the headline index FTSE 100 struggling to sustain the gains. A section of market participants hoping for an invariable recovery after the coronavirus vaccine approval following the breakthrough in the development process have stepped back with the renewed geopolitical stress.

The fresh fears over the likelihood of the uncertain arrangements with regards to the multilateral trade between the United Kingdom and the partner nations of the European Union also weighed down on the headline index.

Nonetheless, businesses have seemingly turned optimistic for future with a quantum of expected uptick in the commercial activities after the British administration authorised the Pfizer-BioNTech developed coronavirus vaccine.

FTSE 100 turns flat

At the time of writing (11:43 am GMT), FTSE 100 was trading largely flat at 6,470.27, up 6.88 points or 0.11 per cent after oscillating between an intraday high and low of 6,479.36 and 6,430.27, respectively. Barring today, the heavyweight shares-constituted index has gained a little more than 3 per cent tracking the upbeat global cues and Covid-19 vaccine cheer in the present month so far.

FTSE 100 (3 December)

(Source: Refinitiv, Thomson Reuters) 

FTSE 100 constituents surged on Tuesday, 1 December, witnessing the best day in the last three weeks after Chinese factory data regenerated the hopes of a faster-than-expected recovery from the coronavirus pandemic-led lacklustre commerce. Many enterprises in the consumer durables, automotive, and the hospitality sectors have already readied themselves for the final push in this last month of the year, the period in which consumer spending jumps up from the average reading.

December direction?

The business adjustments according to the new operative regime in the three-tier system in England, the efficient distribution and outreach of coronavirus vaccine within the nation, and an impregnable trade treaty between the EU and the UK are the potential market drivers in December. However, the global cues will certainly bound the market direction with Wall Street leading the charge. According to the media buzz, the United Kingdom may sign a binding trade agreement with the European Union by the end of next week.

 


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