After the vaccine-infused euphoria at the start of the week a dose of reality seems to have been administered to the market. The FTSE 100 has taken its cue from falls in the US and Asia overnight to trade 0.7% lower,” says AJ Bell investment director Russ Mould.
“Clearly the Covid crisis is not at an end despite the positive news announced by Pfizer and counterparts in Russia – perhaps it would be more accurate to paraphrase Churchill and say we are at ‘the end of the beginning’ of the pandemic.
“This seemed to be the tenor of comments from US Federal Reserve chief Jerome Powell last night as he provided another nudge for US lawmakers to get on with approving a package of fiscal stimulus.
“Given the political backdrop of a disputed election outcome the chances of anything being signed off in the final quarter of the year seem to be slim at best.
“Oil prices were also on the back foot, amid a warning that demand will not recover until well into next year.
“A meeting of OPEC at the end of the month to discuss production quotas looks an increasingly high stakes affair. Members of the oil producers’ cartel, and their affiliate Russia, will have a real balancing act as they try to judge what impact vaccines might have on the global economy.
“Still, it is worth keeping the profit taking of the last two days in perspective. Investors’ perspective on the outlook has definitely been shifted in a positive direction by the vaccine breakthroughs and there is the promise of more news in this area in the weeks to come.”