London pre-open: Stocks seen lower on Covid woes

Pre-open Market Report
06:37, 19th November 2020

(Sharecast News) - London stocks were set to fall at the open on Thursday as optimism over a potential Covid-19 vaccine was replaced by worries about tightening restrictions and their impact on the economy.
The FTSE 100 was called to open 55 points lower at 6,330.

CMC Markets analyst Michael Hewson said: "While markets in Europe managed to eke out some modest gains close to their recent highs, US markets slipped back for the second day in a row, after New York mayor Bill de Blasio announced the closure of schools in response to the rise in cases. With mortality rates starting to rise again in Spain and Italy and infection rates rising to a record in Japan this northern hemisphere winter looks like being a long and dark one

"The late sell-off in the US looks set to translate into a softer open here in Europe later this morning, after another mixed Asia session, and this is where investors need to make a calculation in balancing the risks of the virus, vs the vaccine."

Hewson pointed to the risk for lockdown restrictions to be extended into 2021 and said "the probability that any economic damage will become permanent is only likely to increase".

"These risks then need to be offset by the longer-term benefits of a workable vaccine, which even if starting to get rolled out next year, could take up to two years to really make a difference."

In corporate news, B&Q owner Kingfisher reported a strong rise in third quarter sales as consumers spent the coronavirus lockdown improving their homes.

The company said total like-for-like sales for the three months to October 31 rose 17.4% to £3.46bn. Online sales soared 153% and now represented 17% of total group sales compared with 8% last year.

Royal Mail swung to a loss in the first half as redundancy and Covid-19 costs more than offset higher revenue from booming parcel deliveries.

The FTSE 250 group swung to a £20m operating loss in the six months to the end of September from a £61m profit a year earlier as revenue rose 9.8% to £5.7bn. Royal Mail redundancy costs were £147m and coronavirus costs were £85m.

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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