Companies have been waiting eagerly for the moment when the England-wide lockdown comes to an end, yet the shift to a revamped tier system isn’t the great reopening of the economy as far as many leisure companies are concerned, says AJ Bell investment director Russ Mould.
“The market reaction to Wetherspoon’s latest update would suggest investors didn’t realise the extent of the restrictions on its business. The company says the new regulations have effectively closed half of its pubs, prompting a 2% decline in its share price.
“One would have thought the lifting of the month-long lockdown would have given a boost to investor sentiment, yet we’re rounding off a week where markets ground to a halt.
“The FTSE 250 was always going to be more sensitive to developments with business and society restrictions as it has a greater amount of UK-focused companies than the FTSE 100. The mid cap index is on track to finish the week 1% lower at 19,506. However, the more international-focused FTSE 100 has also gone nowhere, flat on the week at 6,325.
“Investors want to see action on Covid-19 vaccines being approved and there could be a period where equities tread water until that event happens. Weighing on sentiment is the fact questions are being asked about AstraZeneca’s recent vaccine study with reports that the company will run another trial.
“European markets managed to squeeze out small gains on Friday including a 0.2% rise in Germany’s Dax index. Key movers included Spain’s Banco de Sabadell which dived 9.5% after the lender and BBVA called off merger talks. Remy Cointreau advanced 1.3% on positive broker comment.
“Brent Crude paused at $47.51 per barrel following its recent rally while gold nudged up 0.3% to $1,814 per ounce.
“Brexit could be high up on the agenda for markets next week with UK and EU negotiations expected to resume this weekend. Sterling has seen a decent run this month, rising from $1.2917 to $1.3361, with investors increasingly taking the view that some sort of trade deal can be struck. We’ll see if that optimism is still intact as markets move into December.”