21st Oct 2020 17:03
(Alliance News) - Stocks in London ended lower on Wednesday with the UK facing tighter restrictions, as the internationally-exposed FTSE 100 suffering from strength in the pound which surged amid Brexit-related optimism.
South Yorkshire will be the latest region of England placed into Tier 3 coronavirus restrictions as UK Prime Minister Boris Johnson came under renewed pressure on Wednesday to increase financial help for areas under the toughest curbs.
The region will receive a GBP41 million package of funding, but Sheffield City Council's leader Julie Dore pleaded with ministers to "do the right thing" and offer extra support to all Tier 3 areas.
The deal with South Yorkshire comes after bitter wrangling over money with Greater Manchester led to the highest level of restrictions being imposed from Whitehall without an agreement.
Johnson told MPs he would now bypass Greater Manchester's mayor Andy Burnham and offer GBP60 million to local councils.
The restrictions in South Yorkshire, which will cover around 1.4 million people in Barnsley, Doncaster, Rotherham and Sheffield, will come into force on Saturday morning.
The FTSE 100 index closed down 112.72 points, or 1.9%, at 5,776.50. The FTSE 250 ended down 141.38 points, or 0.8%, at 17,787.82. The AIM All-Share closed marginally lower at 972.42.
The Cboe UK 100 ended down 2.1% at 573.68, the Cboe 250 closed down 0.8% at 15,045.56, and the Cboe Small Companies ended up 0.5% at 9,406.09.
In Paris the CAC 40 ended down 1.5%, while the DAX 30 in Frankfurt ended down 1.4%.
"The FTSE 100 has been hit hard once again today, with yesterdays moderate rebound proving short-lived. The ongoing tightening in restrictions on movement in Europe provides little reason for optimism as things stand, with nationwide lockdowns in Ireland and Wales likely to pave the way for similarly drastic action elsewhere," said IG Group's Josh Mahony.
"The FTSE 100 has been Europe's big underperformer, with a surge in sterling dealing a major blow to an index which relies heavily on foreign denominated earnings. From a sector-specific perspective, the airlines have finally taken a step back, following a period of significant growth in the face of undoubtedly detrimental lockdowns," Mahony added.
The pound was quoted at USD1.3145 at the London equities close, up sharply from USD1.2958 at the close Tuesday, on renewed hopes that a Brexit deal can be reached.
The EU's chief negotiator Michel Barnier has insisted that both sides in the post-Brexit trade negotiations must be willing to compromise as efforts continued to restart the stalled process.
Barnier insisted an agreement was "within reach" despite being rebuffed in efforts to continue formal discussions this week. Barnier and his counterpart David Frost have remained in touch but the negotiations have been in limbo since last week's European Council summit failed to produce a breakthrough.
However, Barnier told the European Parliament: "Our door remains open. It will remain open right up until the last day when we can work together."
The UK government has insisted that there must be a fundamental change of approach from Brussels, with Barnier demonstrating that the EU will compromise in key areas. The main stumbling blocks remain fishing rights, the governance of any deal and the "level playing field" aimed at preventing unfair competition, which includes state subsidies.
Sterling hit an intraday high of USD1.3172 versus the greenback in afternoon trade, its highest level since early September.
"The pound has been a top riser in the FX markets so far in today's session. The gains have come on the back of optimism that a breakthrough in Brexit talks is close, which may mean the UK will avoid a no-deal exit after all," explained ThinkMarkets analyst Fawad Razaqzada.
"The pound tends to respond more profoundly to comments by top EU officials, rather than UK, since warnings by the latter is not taken too seriously by market participants as everyone knows Boris Johnson and co are merely talking tough because it is part of their negotiation tactics and they are tasked to get the best deal possible for the UK. Consequently, comments from Barnier hold more weight in the eyes of investors and traders, speculating on the pound," Razaqzada added.
On the economic front, UK consumer inflation accelerated in September, official data showed, as the 'Eat Out to Help Out' scheme drew to a close.
Consumer prices rose 0.5% annually, in line with forecasts and accelerated from 0.2% in August, according to the latest figures from the Office for National Statistics. On a monthly basis, consumer price rose 0.4%, though consensus forecast a 0.5% uptick. In August, consumer prices fell 0.4% month-on-month.
In the FTSE 100, Antofagasta closed up 0.9% after the Chilean copper miner reaffirmed its guidance for 2020, despite a fall in copper output during the third quarter.
The company said copper production in the third quarter of 2020 came in 4.6% lower quarter-on-quarter at 169,600 tonnes, with the company blaming the decline on "major maintenance work" at its Los Pelambres mine in Chile as well as expected lower grades at Antucoya.
Copper sales in the third quarter fell 9.4% to 162,100 tonnes from 178,100 tonnes in the second quarter.
For the nine-month period, copper production was in line with forecasts at 541,300 tonnes, though down 7.3% compared to the same period in 2019. Copper sales fell 7.3% to 536,300 tonnes, gold production fell 34% to 149,400 tonnes, and molybdenum production was down 4.3% at 8,900 tonnes.
Looking further ahead, Antofagasta added: "In 2021, production is expected to be 730,000 to 760,000 tonnes of copper mainly as grades start to increase at Centinela concentrates in the fourth quarter of 2020 and assuming that Covid-19 health protocols remain in place for the whole year."
At the other end of the large caps, Fresnillo closed down 4.4% after the Mexican gold miner lowered its full-year gold guidance "marginally" as working restrictions due to the virus at the Herradura mine in Mexico hurt production.
The company now expects annual gold production in the range of 745,000 to 775,000 ounces. Its previous guidance range was between 785,000 and 815,000 ounces.
For the three months to September 30, gold output fell 6.3% quarter-on-quarter to 172,718 ounces from 184,356 due to the lower overall speed of recovery and ore grade at both Herradura and Noche Buena mines. Gold output fell 18% year-on-year from 209,752 ounces in the year ago quarter.
The euro stood at USD1.1868 at the European equities close, up from USD1.1825 late Tuesday. Against the yen, the dollar was trading at JPY104.53, down sharply from JPY105.57 late Tuesday.
Stocks in New York higher at the London equities close in the midst of positive talk from Washington policymakers about progress on a rescue package to aid the US economy.
The DJIA was up 0.1%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.3%.
President Donald Trump's administration sent three top officials to speak on three different TV networks Wednesday morning to tout what they called progress made toward a deal.
White House chief of staff Mark Meadows said House speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin still have differences but are narrowing the gap.
"I am optimistic," he said on Fox Business Network. "We do share one goal and that is hopefully to get some kind of deal in the next 48 hours or so."
In a letter to Democratic lawmakers late Tuesday, Pelosi said "both sides are serious about finding a compromise."
After months of talks on new measures to boost the virus-damaged US economy, the comments boost chances of reaching a deal before the November 3 presidential election.
On the corporate front, Verizon Communications was down 0.5% on Wall Street. The telecommunications provider reported a fall in net income, and raised its full-year outlook.
In the three months to September 30, the US firm's net income plunged 16% year on year to USD4.50 billion from USD5.34 billion.
Further, diluted earnings per share dropped 16% to USD1.05 from USD1.25.
Total operating revenue fell 4.1% to USD31.54 billion from USD32.89 billion. Service revenue slipped 1.1% to USD16.26 billion, while Wireless Equipment revenue fell 20% to USD3.40 billion from USD4.26 billion.
Brent oil was quoted at USD41.95 a barrel at the London equities close, down from USD42.48 at the close Tuesday.
Oil stockpiles fell in line with expectations last week, according to the latest figures from the Energy Information Administration.
Crude oil inventories fell 1.0 million barrels, against market expectations for a draw of 1.02 million barrels. That comes a week after crude stocks fell 3.8 million barrels.
Gold was quoted at USD1,922.40 an ounce at the London equities close, higher against USD1,908.45 late Tuesday.
The economic events calendar on Thursday has US jobless claims at 1330 BST.
The UK corporate calendar on Thursday has third quarter results from information and analytics provider RELX, pest control firm Rentokil Initial and from consumer goods giant Unilever.
By Arvind Bhunjun; [email protected]
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