While not moving quite as enthusiastically as they did after previous vaccine updates, Pfizer‘s latest news saw global equities nudge higher on Wednesday. Noticeably muted, though, was the FTSE. Having led the pack in recent vaccine news rallies, the index was weighed the pound rising on renewed Brexit hopes.
While the Dow Jones rallied by 0.40%, and the CAC and DAX moved up by just under half a percent apiece, the FTSE lagged slightly behind with its 0.33% gains – having opened with a 35-point loss.
Meanwhile, the pound gained 0.31% against the euro, up to 1.1206, while it rallied 0.33% against the dollar, up to 1.3299. Speaking on Brexit chatter and commodities movements earlier in the day, IG‘s Senior Market Analyst, Joshua Mahony, said:
“The FTSE 100 is leading European declines, with a strengthening pound once again proving the undoing of the highly international index. With Brexit negotiations running out of time, we are finally seeing some glimmer of hope that a deal could be within reach.”
“With rumours of a potential deal early next week, expectation that EU negotiators will update envoys from the 27 member states on Friday does highlight the potential for a breakthrough.”
“However, the red lines over fishing rights, the level playing field, and governance remain a likely sticking point which remain a major hurdle that has been insurmountable thus far.”
“With no sign that those key topics have been resolved, there will be many sceptics at the prospect of an imminent trade deal.”
Today’s Brexit optimism may just be a flash in the pan, with no actual concessions being penned by either side. It may be likely that the game of diplomatic chicken will last until the latter stages of 2020 – as we near the NYE deadline.
Where indexes such as the FTSE will likely draw their short-term optimism from will be further vaccine updates. While Pfizer’s news today was more encouraging than ground-breaking, FDA approval for Pfizer or Moderna, or a new candidate from AstraZeneca, would give equities a welcome second wind.