The FTSE 100 opened firmly in positive territory in spite of the volatility on the oil market, buoyed by progress towards finding a coronavirus vaccine.
“Oxford University thinks the vaccine they are developing has an 80% chance of success,” said Jasper Lawler of CMC Markets.
“Corporate partnerships will probably be needed for any vaccine. UK pharmaceutical shares might get their own shot in the arm.”
In fact, it was building materials firm CRH (LON:CRH) that topped the Footsie risers 4% after it maintained its dividend payment, though it did halt its share buyback programme.
Top of the fallers was Newcastle-based accounting software group Sage (LON:SGE), down 4.3%. Earlier this month it cancelled it buyback as it reduced guidance.
6.45 am: FTSE 100 set to start on the front foot
The FTSE 100 is expected to open a little higher on Wednesday as investors pause for breath while keeping a close eye on the ongoing rout in the oil markets, as well as another for the latest UK inflation numbers.
Spread bettor IG expects the FTSE 100 to open up around 21 points after ending Tuesday’s session 172 points lower at 5,641.
Oil prices are still causing jitters around the markets as the cost of a barrel of crude continued to collapse overnight in the face of plunging demand and fears of a massive glut of crude.
Prices of West Texas International (WTI) crude, the standard for US oil, were down around 7.3% at US$10.62 a barrel on Wednesday morning, while Brent crude, the benchmark for global oil, has fallen 15.3% to US$16.38 a barrel, its lowest level in around two decades.
Metals prices also found themselves under pressure as the coronavirus pandemic leaves many with concerns that demand for natural resources will take a hit due to economic shutdowns currently in place.
Statements by President Donald Trump that the US will move to support its energy industry also failed to calm markets, as did the news that Congress has agreed a US$484bn relief fund for the US economy which could be signed off by Thursday.
Overnight, the Dow closed down 2.67% at 23,018 while the S&P 500 dropped 3.07% to 2,736 and the Nasdaq fell 3.48% to 8,263.
The anxiety spilled over into Asian markets this morning with the Japanese Nikkei 225 down 1.29% while Hong Kong’s Hang Seng was down 0.26%.
On the currency markets, the pound was down 0.1% at US$1.2286 against the dollar, although UK inflation data could provide a catalyst for movement alter today as investors assess the health of the British economy.
Significant announcements expected on Wednesday:
Economic data: UK inflation
Around the markets:
Sterling: US$1.2286, down 0.1%
Brent crude: US$16.38 a barrel, down 15.3%
Gold: US$1,684.72 an ounce, up 0.39%
Bitcoin: US$6,891, down 0.05%
- The price of US crude oil for June delivery plunged by nearly 50% on Tuesday as global oil markets remained under intense pressure – FT
- The Treasury is under mounting pressure to expand its furlough scheme as the number of people on taxpayer-funded leave climbed to 1.3 million – Telegraph
- More than 80 publicly listed companies have used the US Treasury’s $350 billion bailout fund for keeping small businesses afloat – FT
- Netflix has more than doubled the number of new subscribers it expected in the last three months as more people signed up amid the coronavirus pandemic – Guardian
- Coca-Cola’s sales volumes have dropped by a quarter this month; the drinks maker has been hit hard by coronavirus lockdown despite initial stockpiling – FT
- The US Senate passed a near $500bn coronavirus aid package on Tuesday for small businesses, including additional help for hospitals and virus testing – Guardian