FTSE 100 hits nine-month high as oil prices jump

After a rough year, Britain’s FTSE 100 is ending 2020 on the front foot.

The blue-chip index has jumped to a new nine-month high this morning, as investors hope that 2021 will bring better economic times.

London’s FTSE 100 rose to a nine-month high on Friday as a jump in oil prices boosted energy stocks, while investors remained focussed on Brexit trade talks with only four weeks left for Britain’s transition period out of the bloc to end.

The blue-chip FTSE 100 was up 0.5% by 0807 GMT and was set for a fifth straight week of gains on optimism that a COVID-19 vaccine would lead to a swift economic recovery.

A British minister said the country hoped for millions of doses of the vaccine produced by Pfizer Inc and BioNTech SE by the end of the year.

Royal Dutch Shell and BP were among the biggest gainers on the FTSE 100 as major oil producers agreed to continue production cuts to overcome coronavirus-induced demand concerns.

The mid-cap FTSE 250, considered a barometer of Brexit sentiment, dropped 0.1%.

The European Union and Britain talked into late on Thursday to try to secure a Brexit trade deal, with an EU official saying an agreement was closer than ever but a UK government source warning chances for a breakthrough were receding.

Optimism that Covid-19 vaccines will roll out soon are also lifting stocks in London (despite a report in the Wall Street Journal that Pfizer has suffered some supply chain problems).

Fiona Cincotta of Gain Capital explains:

News that Pfizer has cut its rollout target for the covid vaccine by half, owing to supply chain obstacles has knocked risk sentiment. Vaccine optimism put the markets on a stellar run across November as investors priced in the end of the pandemic and a return to pre-pandemic growth, regardless of the dire few months expected before the vaccine becomes widely available. Then news from Pfizer means that it could now take longer to reach the end of the pandemic tunnel, but with other vaccines also coming, this is more of a setback rather than risk reset news.

However, optimism surrounding a large US economic stimulus package is helping lift US futures after the close. A $908 billion rescue package in the world’s largest economy now appears within reach, offering support to the global risk sentiment picture, off-setting some vaccine disappointment.

Monthly performance.

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