FTSE 100 set for modest fall as markets mull Brexit trade talks jitters and AstraZeneca vaccine worries

The FTSE 100 was set to fall slightly today amid uncertainty over the Brexit trade negotiations, with Michel Barnier reportedly having second thoughts about visiting the UK this weekend for talks due to British intransigence.

Traders and business leaders still on the whole take the view that a deal will be done at the eleventh hour, but there is frustration over the uncertainty of knowing what the deal will look like, and how it will affect the UK in future years.

A four-year review of EU-UK trade was seen this week as a potential way forward, meaning that after that period, the EU could review whether Britain had behaved in accordance with non-binding agreements on free and fair competition, the Financial Times reported. 

However, that was never going to be accepted by the EU as it could give Britain the right to flout level playing field ideals for years, then only get punished with tariffs after the event. Only the prospect of the EU being allowed to impose harsh penalties such as  a full no-deal scenario and WTO terms.

Besides, the EU is acutely aware that Britain’s goal, longer term, is to move away from the trade agreements over time.

Reports overnight suggested Barnier was not going to bother with his planned trip to the UK this weekend for further talks, although the BBC this morning reported that he would still be coming.

With the two sides clearly a long way off a deal, the FTSE 100 was being called down by IG Index traders a slight 14 points to 6347.

Trading will be subdued for a second straight session as the US markets are only open for half a day due to Thanksgiving. 

Many US traders will stay home with their families for a second day, so volatility will be quiet across the board, CMC Markets said.

Asian markets barely moved this morning as traders there sat on the fence until the US returns fully on Monday, even despite figures showing Chinese corporate profits surged 28% last month year on year.

Today sees the final reading of France’s GDP for the third quarter, which should remain at the 18.2% previously calculated. A decent rebound from the 13.7% contraction in quarter two.

French inflation out later is set to come in at 0.0%, down from 0.1% in October.

The mood in the markets has been slightly tempered in recent days by rising concerns about the AstraZeneca - Oxford University coronavirus vaccine. 

It has emerged that a mistake led to one group of trial subjects receiving a smaller dose in the first half and a full one in the second. 

That group proved to have the strongest positive result from the vaccine, with 90% efficacy. But the trial number was small and many view that as meaning US regulators will not approve it for use.

AstraZeneca shares have fallen around 6% since announcing its results on Monday compared with Pfizer and BioNTech’s 6% and 14% jumps. Moderna is up 11% since its study was released.

The jitters that have been surrounding the markets since their recent surges have been worsened by a growing number of economists now fretting that VAT and income tax may have to rise to fill the hole in the public finances left by Covid-19. 

The Institute for Fiscal Studies says the government will need to find £40 billion of savings or tax rises.

While such hikes would mean Boris Johnson breaking a pledge for a “triple lock” on income tax, National Insurance and VAT, some consumer research has shown the public would wear it, given the crisis the country has been through.

The problem is, it would probably crimp economic growth, so the government is unlikely to pursue such a route until long into next year.

As a reminder of how fragile the economy still is, figures showed furlough levels jumping back to their highest level since June during the current lockdown.

Airline stocks may interest investors today after Delta and Alitalia said they would open up quarantine free flights from the US to Italy. 

In what will be the first such bridge across the Atlantic, the two countries have reached an agreement that passengers would not have to self-isolate if they have three negative Covid tests.

One test would be 72 hours prior to departure and then rapid tests would be done at Atlanta airport before boarding and on arrival in Italy.