Claims of a coronavirus vaccine breakthrough excites the markets

5 February 2020, 18:24

Coronavirus. Picture: PA

The FTSE 100 closed the day up, despite World Health Organisation playing down the reports.

The coronavirus continues to dominate movements on the stock market as claim and counter-claim left analysts and investors scratching their heads.

By the end of Wednesday, the majority of investors preferred to believe the reports in China of a possible cure and a report by Sky News revealing a “significant breakthrough” had occurred on tests for a vaccine.

Their positivity saw the FTSE 100 close up 42.66 points, or 0.57%, at 7482.48 – although the boost was helped by the pound losing strength against the dollar.

A pound was worth 1.300 dollars, down 0.23%, as markets closed, although it was up 0.1% against the euro at 1.181 euros.

It had grown against the dollar in early trading, following strong PMI services data released on Wednesday morning. But by the afternoon it had been wiped out.

European markets were also enjoying the reports of a breakthrough in finding a vaccine, with the French CAC 40 up 1% and the German DAX 30 up 1.5%.

David Madden, market analyst at CMC Markets, said: “The World Health Organisation clarified there are ‘no known effective therapeutics’ for the virus, but the bullish mood can’t be contained.

“Sentiment has been lifted as traders are less fearful about the health situation now. China’s Xi Jinping has made it clear the country will continue to apply strict controls in a bid to contain the situation, and that has reassured traders too.”

In company news, the FTSE 100 was dragged down by cigarette maker Imperial Brands, which sunk 6.7%, down 131.6p to 1,821.6p, as bosses unveiled a profit warning following clampdowns on vaping in the US.

Vodafone became the latest UK telecoms giant to react to Government plans to limit Huawei’s access to the 5G rollout.

Bosses said they would take a £169 million hit to remove the Chinese tech firm’s products already in use. Vodafone follows BT, which recently said its own remedies on the issue could cost £500 million.

Shareholders were unimpressed, with shares closing down 4.26p, or 2.8%, at 146.98p.

GSK said it was “too soon” to give its own assessment of the coronavirus outbreak. But the company did say sales of its shingles vaccine were growing,

Bosses also said they expect a planned split into research and development and another focused on consumer health will cost around £2.4 billion and revealed full-year earnings below consensus. Shares closed down 75.4p at 1,739.6p.

Struggling car dealership business Lookers had a better day, with shares closing up 1.9p at 56.5p as the company unveiled a new chief executive and avoided another profit warning.

Mark Raban takes the top job, replacing Andy Bruce who quit three months ago after 19 years with the company.

Investors in Paddy Power owner Flutter Entertainment appeared unconcerned by the Competition and Market’s Authority revealing it would investigate the firm’s £10 billion merger with The Stars Group in Canada. Shares closed up 52p at 8,650p.

The biggest risers on the FTSE 100 were Smurfit Kappa up 182p at 2,900p; DS Smith up 21.6p at 374p; Mondi up 80.5p at 1,657.5p; Informa up 34.8p at 820p and IAG up 22.8p at 617.2p.

The biggest fallers were Imperial Brands down 131.6p at 1,821.6p; GSK down 75.4p at 1,739.6p; NMC Health down 31.5p at 970p; Vodafone down 4.26p at 146.98p and BT down 4.52p at 158.3p.

By Press Association

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