By Jack Denton
U.K. stocks traded below flat on Wednesday, as Parliament approved the post-Brexit trade deal and the U.K. became the first country to approve the COVID-19 vaccine developed by AstraZeneca and the University of Oxford.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.21% , the index of London’s top stocks by market capitalization, was 0.2% lower on Wednesday.
London joined European markets in trading near flat in the middle of a week bookended by holidays. The London Stock Exchange will close at 12:30 p.m. on Thursday for New Year’s Eve and will be closed on Friday.
The U.K. took centerstage during a quiet day in Europe, as the landmark post-Brexit trade deal is signed into law in London, completing the preparations for the U.K.’s final exit from the European Union at the end of this year.
The deal, which governs the future trading relationship between the EU and the U.K., received unanimous support from ambassadors of the bloc’s 27 member states on Monday, and U.K. Prime Minister Boris Johnson pushed the legislation through Parliament in one day.
Plus, this essential reading: A Brexit Trade Deal Has Finally Been Struck. Here’s What It Means for Markets and Investors.
The U.K. also became the first country to approve the COVID-19 vaccine developed by pharmaceutical company AstraZeneca /zigman2/quotes/203048482/delayed UK:AZN -1.54% and the University of Oxford, after the country’s medical regulator authorized it for emergency use.
Health secretary Matt Hancock said in an interview with the BBC that the approval of the AstraZeneca–Oxford University shot gives the U.K. enough vaccines to cover the entire population.
The approval comes as the U.K. moved more of its population into lockdown, with three-quarters of England to live under the strictest tier of restrictions, and the government considering whether to delay the return of schools in the new year.
“The British pound is in a good mood too, bolstered by the Oxford–AstraZeneca vaccine being approved for use in the U.K., something that could hasten the journey towards vaccinating large swathes of the population,” said Marios Hadjikyriacos, analyst at XM.
The pound has rallied 0.76% against the dollar, touching the $1.361 mark earlier on Wednesday.
Hadjikyriacos added that “with Brexit out of the spotlight for now, the main variable for sterling may be the vaccine deployment timeline, as that could determine how soon the rolling shutdown game ends and how quickly the economy heals.”
AstraZeneca’s shares opened 1.5% higher, setting near flat, on the back of the COVID-19 vaccine approval. These built on gains from earlier in the week, when the stock surged around 4% in anticipation of the regulatory clearance.
Pub and restaurant groups made up another contingent that bounced on the positive vaccine news. Shares in Mitchells & Butlers /zigman2/quotes/209008939/delayed UK:MAB -0.24% rose 0.9% and Marston’s Brewery /zigman2/quotes/203821737/delayed UK:MARS -1.31% surged 3.4%, with JD Wetherspoon /zigman2/quotes/209658419/delayed UK:JDW -0.53% climbing 1.3% and City Pub Group /zigman2/quotes/210522456/delayed UK:CPC 0.00% ticking up 0.8%.
Bank stocks broadly rallied, recouping some of yesterday’s losses on concerns over what deal will be struck with the EU in 2021 on financial services. Shares in Barclays /zigman2/quotes/208409333/delayed UK:BARC +1.83% , HSBC /zigman2/quotes/203901799/delayed UK:HSBA +0.90% , NatWest /zigman2/quotes/209265718/delayed UK:NWG +0.96% and Lloyds /zigman2/quotes/202285510/delayed UK:LLOY +3.04% all rose.
Multinationals like drinks company Diageo /zigman2/quotes/205611832/delayed UK:DGE -5.52% , assurance provider Intertek /zigman2/quotes/209087067/delayed UK:ITRK +1.20% , and asset-management company Schroders /zigman2/quotes/200207320/delayed UK:SDR +1.53% fell on Wednesday, unraveling some of Tuesday’s gains when the market first reacted to the new post-Brexit deal. Analysts highlighted multinationals, which benefit from tariff-free trade, as among the winners of the deal.