London pre-open: Stocks seen lower; GDP in focus
London stocks were set to fall at the open on Thursday as doubts creep in about how easy it will be to roll out a Covid-19 vaccine.
The FTSE 100 was called to open 52 points lower at 6,330 following eight consecutive days of gains. In the first half of the week, stocks rose sharply on news that the Covid-19 vaccine being developed by Pfizer and BioNTech had shown 90% efficacy.
CMC Markets analyst Michael Hewson said: "Having underperformed for a good part of this week the Nasdaq saw a fairly decent rebound, while the S&P500 closed to within a whisker of a new record close.
"Now that a couple of days have gone by and we’ve had more time to absorb the enormity of this week’s announcement, we are now starting to hear some more discerning voices make their presence felt, in terms of the logistical difficulties involved in the distribution of this vaccine, as well as how effective the vaccine is likely to be on a longer-term basis.
"This would suggest that there is probably a lot of wishful thinking going in with respect to how quickly any new vaccine is likely to get rolled out. In other words, investors run the risk of getting ahead of themselves, running the risk of a sharp pullback.
"These concerns could well start to see a little profit taking start to creep in as Europe wakes up for a new trading session, with markets here set for a modestly lower open."
Investors will also be mulling over the latest UK GDP reading released earlier, which showed the economy grew by a record 15.5% in the third quarter but slowed in September.
In corporate news, Burberry said revenue would be affected by fewer markdowns as the luxury brand reported a 75% drop in first-half profit driven by the Covid-19 crisis.
Adjusted operating profit for the six months to 26 September fell to £51m from £203m a year earlier as revenue declined to £878m from £1.28bn. Excluding currency movements profit fell 71%.
Burberry said business improved in the second quarter as stores reopened from Covid-19 lockdowns and that comparable store sales returned to growth in October. The company said it had reduced markdowns to support the brand long term and that this would be a "revenue headwind" in the second half.
Landscaping products specialist Marshalls said it was lifting 2021 expectations as like-for-like sales rose in October.
The company said sales last month rose 5% and in the four months to October 31 had returned to the same level as 2019 on a like for like basis, driven by continued strong demand in the domestic end market, a return to more normal levels of public sector and commercial trade and strong growth in the international sector.
"Trading continues to improve and order books are robust," the company said.