By Steve Goldstein
U.K. blue chips reversed gear on Thursday, heading lower after eight straight days of gains.
After ending Wednesday at its highest level since June 8, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.08% fell 0.9%. Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR +1.51% , the hard-hit engine maker, dropped 8% after rallying on the news about the effectiveness of drugmaker Pfizer’s vaccine candidate. HSBC Holdings /zigman2/quotes/203901799/delayed UK:HSBA -0.20% and Standard Chartered /zigman2/quotes/200125072/delayed UK:STAN +1.36% dropped sharply.
“As the vaccine euphoria fades and the reality of increasing virus cases across the EU and U.S. hits the headlines, we think there will be a pull back into the end of the week,” said Rony Nehme, chief market analyst at Squared Financial.
The 14.4% surge in the FTSE 100 over eight sessions was the longest of the year, and best from a percentage standpoint since Nov. 5, 2008.
There is growing concern about the failure, so far, of European Union-U.K. trade talks. One article, in the Guardian, speculated that queues of trucks in the absence of a trade deal could make Kent “the toilet of England.”
News that the U.K.’s gross domestic product rebounded in the third quarter did little to help sentiment. The U.K. economy improved 15.5% in the third quarter, including 1.1% growth in September.
“We expect GDP to contract again during Q4 as virus case numbers picked up and ultimately fuller lockdowns were implemented from the start of November, though we think the fall in GDP will be far more modest than was the case earlier in the year for various reasons: i) the lockdown is less severe this time, ii) people may interpret the rules more loosely than before, iii) having gone through one lockdown, households and firms are in a better position to adapt more quickly and effectively to preserve more of their daily business than before, and iv) there is now light at the end of the tunnel with effective vaccines in the process of being trialed and subsequently (hopefully) approved, which should support confidence ahead of vaccination,” said economists at Nomura.