Europe midday: Shares tread water as wary investors eye Brexit talks
By Frank Prenesti
Date: Wednesday 02 Dec 2020
(Sharecast News) - European shares were lacklustre at lunch on Wednesday, with news that Britain had approved a Covid-19 vaccine the only bright spot as investors paused to monitor Brexit talks and any moves on US fiscal stimulus.
The pan-European Stoxx 600 index had pared early losses to be 0.17% lower with Continental markets mixed. The vaccine news helped the UK FTSE 100 keep its head above water, while the German DAX and French CAC 40 were both lower.
US Dow Jones futures were down 122 points.
The UK government said it had approved the Pfizer-BioNTech vaccine, with the first immunisations rolling out from next week, although the response from investors was muted.
"The vaccine roll outs had already been largely factored in and helped the FTSE 100 gain by more than 12 per cent in November, the biggest climb for 11 years. The breather comes after the roaring session on Tuesday and after a record close for the S&P 500 in New York on hopes a massive stimulus deal will be agreed for the US economy," said Hargreaves Lansdown analyst Susannah Streeter.
"Eyes and ears are also turning to the Brexit talks, which still hang in the balance. Nervousness about the outcome of negotiations pushed sterling below 1.11 against the euro, and we should expect further volatility with concerns still high that the UK could end the transition year without a trade deal in place.''
Sterling fell 0.5% against the dollar to 1.3355 after the EU's Brexit negotiator, Michel Barnier, indicated that a no-deal scenario was likely. A weaker pound tends to boost the top-flight index, as around 70% of its constituents derive most of their earnings from overseas.
In the US a bipartisan group of lawmakers proposed a $900bn coronavirus aid package which appeared to be well received by the Treasury and Federal Reserve, but Senate Majority Leader Mitch McConnell, put forward his own, smaller, plan that looked unlikely to gain support in the Democratic-controlled lower house.
In corporate news, shares in G4S jumped 8.25% after Canada's GardaWorld lifted its offer for the UK outsourcer to 235p a share, valuing it at £3.68bn.
Shares in lab instrument maker Tecan Group jumped 6.7% after the company raised earnings forecasts.
Workspace provider IWG was under the cosh after saying it would raise £300m in a convertible bond issue to help pay for a string of planned acquisitions at attractive prices.
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