Europe open: UK proves a drag for shares in subdued market
European shares started the final session of the week slightly lower, with a weaker London market dragging on sentiment as the UK government unveiled new post-lockdown measures.
The pan-European Stoxxx 600 index was 0.1% down, with the UK FTSE down 0.87%. France’s CAC 40 was 0.22% higher and Germany’s DAX up 0.2%. US markets were closed overnight for the Thanksgiving holiday, providing little impetus for Asian shares, although Chinese industrial profits data for October showed a 28.2% increase, the best one-month gain since December 2011.
“This end of week caution appears to be predicated on concern over the short-term economic outlook, as the extension of tighter restrictions on economic activity in France, Germany and the UK creates further uncertainty over the potential for permanent economic scarring as we head into 2021,” said CMC Markets analyst Michael Hewson.
“The vaccine story is undoubtedly good news, however there is some concern as to what the economic landscape will look like when we come out of the other side of winter.”
In the UK, the government unveiled a stricter tiered system to take effect when the latest national lockdown ends on December 2, with tier 3 the most severe. Stocks sensitive to any restrictions were weaker on Friday, with British Airways owner IAG, easyJet, International Hotels Group, Whitbread and Cineworld all lower.
Investors were also eyeing the resumption of face-to-face Brexit talks in London this weekend as both sides strive to agree a deal. EU chief negotiator Michel Barnier called for an meeting of European fisheries ministers today ahead of the resumption.
“Given that this has been one of the three main barriers to agreeing to a trade deal, a meeting of this kind so late in the day may indicate there is a broad framework agreed with the UK, at least on fishing rights,” Hewson said.
In equity news, shares in Spanish lender Banco Sabadell plunged more than 12% after merger talks with rival BBVA were called off after the pair failed to agree financial terms.
The two banks had announced the talks on November 16 as they looked for a deal to create Spain’s second-biggest domestic bank with almost €600bn in assets. BBVA shares were up 2%.
Shares in British drugmaker AstraZeneca fell 0.6% as questions were raised about the results of its late-stage vaccine study, potentially hindering the company’s chances quick approval in the US and EU.
The company’s chief executive said the company is likely to run an additional global trial to assess the efficacy of the vaccine using a lower dose.
JD Wetherspoon shares fell 1.5% after the company said half of its pubs would be shut under the new post-lockdown restrictions, with CEO Tim Martin claiming that the government had replaced one form of lockdown with another by stealth.
Shares in outsourcing group Capita were lower as the company revealed it was in talks with private equity house Montagu about the disposal of its educational software business.