Financial Markets Latest: UK markets still strong - but are there storm clouds ahead?

The FTSE climbed on Monday morning
London saw the FTSE rise again this morning

The FTSE 100 is still rising after a week of good news but Brexit and coronavirus could still be a fly in the ointment. Tradefair brings you the latest financial market news...

"While several self-imposed deadlines have come and gone, the end of the [Brexit] transition period is just a month-and-a-half away, suggesting something will have to give soon," Russ Mould, investment director at AJ Bell

There was another increase for the FTSE 100 this morning (November 16) thanks to improved economic market news from China and Japan, as well as continuing optimism surrounding coronavirus vaccines.

Commodity stocks helped the FTSE jump by nearly 1.5% in the morning session as retail sales in China increased at their fastest rate of the year in October, according to new official data.

IAG - owner of British Airways - surged 5.9% as hopes were raised that there could be a way out of the pandemic and a return to some kind of normality for the travel industry in the months ahead.

Vodafone Group increased 3.5% based on full-year performance projections, while Whitbread rose 3.6% amid continued positive housing market data.

Meanwhile, energy and mining stocks ensured crude and metal prices tracked higher once more.

Good news from Asia

A historic trade deal saw markets throughout Europe post steady gains at the start of a new trading week, with members of the Association of Southeast Asian Nations including Japan sitting down at a virtual summit yesterday to sign the Regional Comprehensive Economic Partnership (RCEP).

It is hoped the largest free trade agreement in the world will lead to greater prosperity for Asia and a boost for the rest of the world, since its members cover almost 30% of global GDP.

This was coupled with news that Japan's economy had rebounded 5% in the third quarter of the year, far more than the 4.4% originally projected. This lifts the economy out of recession and led to the positive suggestion that more nations could follow suit in getting away from the negative effects of the pandemic more quickly than had once been feared.

Healthcare industry fights back

This comes after the UK stock market recorded its best week since April last week, with Pfizer announcing that its vaccine breakthrough could soon start to bring the Covid-19 pandemic under control.

Furthermore, other pharmaceutical firms are beginning to bring their own vaccines into the final testing stages, providing the potential for further good news on this front from Russia, Belgium and the US.

There was also positivity from the UK economy as a whole, with official figures showing it grew 15.5% in the third quarter as people returned to work and the high street.

Cloudy skies remain?

However, analysts remain cautious over potential storm clouds gathering and health officials' continued warnings that this is still likely to be a hard winter.

The number of coronavirus cases in Britain is continuing to rise, while deaths per day remain at an average of more than 400.

Prime minister Boris Johnson is also once again in isolation after coming into contact with someone who tested positive for the virus, although he insists he is fit and well.

Elsewhere, Brexit discussions are to resume this week (virtually for Johnson), with many insiders calling it 'crunch time' for the trade deal.

"While several self-imposed deadlines have come and gone, the end of the transition period is just a month-and-a-half away, suggesting something will have to give soon," Russ Mould, investment director at AJ Bell, told Reuters.

A senior Whitehall insider told reporters that Johnson faces a big decision over whether to compromise or not, and that although he remains insistent that he will go to a no-deal scenario if necessary, ministers including chancellor Rishi Sunak are said to be advocating a deal.

In Europe, the CAC 40 in Paris was up more than 2% this morning, the Dax in Frankfurt lifted 1.3% and the Stoxx 600 index increased by around 1.4% to nudge closer to last week's eight-month highs.

The Dow Jones Industrial Average in New York closed up 1.37% on Friday.

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