FTSE 100 to continue drift higher despite expected delay in UK reopening plans

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The FTSE 100 is likely to continue to drift higher as we begin the new week, though later today Downing Street is expected to delay the further relaxation of pandemic restrictions.

Concerns about the rising levels of infection in the Delta or Indian variant have, according to reports, led the government to push back the final reopening plans for another four weeks, which traders say will put pressure on the pound.

The Prime Minister will announce later that most current rules will remain in place until mid-July, meaning nightclubs will stay closed and people will be encouraged to keep working from home where possible, the BBC is reporting. 

Having already slipped to a one-month low against the dollar last week, a softer sterling will further smooth the way higher for the multinational names of the FTSE, which is expected to open 15 points higher this morning from its 7,134.06 close at the end of last week, according to spread betters on the IG platform.

“The overriding impression from the last few days’ events appears to be that bond markets and investors in general appear to be buying the central bank narrative that the current high levels of inflation are transitory and will soon pass,” said market analyst Michael Hewson at CMC.

He said while this was a seductive narrative, “the wider question is not whether it is true, but whether current central bank policy is currently too loose and needs to be reined in a bit”.

For the next couple of days the market will probably keep its powder largely dry ahead of the Federal Reserve meeting the concludes with a policy decision and press conference on Wednesday.

The Fed, says Hewson, “has the perfect opportunity to reset market expectations with respect to tapering its bond purchases. No one is seriously suggesting a rise in rates yet, but there is scope to reduce the monthly bond purchase amount from the current $120bn a month without jeopardising the recovery”.

Back on these shores, today’s corporate diary has a mid- and small cap theme, with entries from clothes retailer Ted Baker PLC (LON:TED), housebuilder Crest Nicholson Holdings PLC (LON:CRST), recruiter SThree PLC (LON:STEM) and venture capitalist investing pair Augmentum Fintech PLC (LON:AUGM) and Draper Esprit PLC (LON:GROW).

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