FTSE closes lower as near-term global growth outlook darkens

The FTSE is heading into the close just shy of 1% lower as fears over the near-term economic growth outlook overshadowed more upbeat vaccine news.  

This time it was the turn of AstraZeneca to inform as to how its covid -19 vaccine is performing in recent trials. The vaccine was found to provoke a robust immune response, particularly in older adults in Phase 2 trials. Whilst this is great news, after the big hitting data from Pfizer and Moderna this week, AstraZeneca’s was insufficient to overshadow fears of rising covid cases, tighter lockdowns and the impact on the economy. 

The IMF confirmed the market’s fears warning that whilst the global economy is recovering from the depths of the covid crisis, there are signs that the recovery is running out of steam, particularly in countries were cases are on the rise. 

As if on cue US initial jobless claims unexpectedly rose last week to 742k, up from 711k previously and well above the 707k expected. The rise in claims reflects the impact the resurgence of covid, tightening lockdown restrictions and the absence of additional fiscal stimulus from is having on the labour market recovery. 

Royal Mail takes a step on IPO price 

There have been some bright spots early on in the session with Royal Mail finding itself an unexpected winner of the covid pandemic. Royal Mail reported an impressive 9.8% increase in first half revenue as letter volumes drop but parcels more than compensated. With parcels now making up for 60% of revenue, the postal deliveries group has crossed an important threshold whereby parcel deliveries have surpassed letters thanks to a surge in online shopping. This bodes well for the future given that online shopping isn’t expected to drop off even with a vaccine.  Even so that wasn’t enough to prevent a serious hit to profits, which fell 90.2% to £17 million. rise in costs #RM slumped into an operating loss of £20m. 

The stock closed 3% higher just shy of 300p a level last seen almost 2 years earlier. 

Dollar rises, Pound slips on Brexit jitters 

In the FX space, the Dollar dominated, boosted by risk flows as investors sought out its safe haven properties. The Pound fell against both the USD and EUR as Brexit jitters got the better of investors as the EU Summit kicks off and bulls are preferring to wait on the side-lines ahead of any market moving headlines.