FTSE slides as PMIs show extent of economic damage in Europe

Mixed company reports and data showing the extent of the coranavirus damage on European economies has knocked the FTSE slightly this morning causing the index to drop 0.4%

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Mixed company reports and data showing the extent of the coranavirus damage on European economies has knocked the FTSE slightly this morning causing the index to drop 0.4%. But it was not all bad news. UK house builder Taylor Wimpey helped lift other property companies and DIY specialists with its plan to return to construction in steps from May 4. The firm said that its order book has grown on last year and that its cash position remains strong.

A number of FTSE firms focused on the domestic retail market also traded higher in anticipation of further government care packages and support. The UK government now plans to raise £180bn over the next three months to plug the gap created by its lenient tax collection policy during the lockdown.

Aerospace component maker Meggitt lead the FTSE gainers after it reported a revenue increase in the first quarter while vowing to cut 15% of its workforce.

Unilever shares struggled this morning despite the firm reporting a rise in first-quarter turnover and keeping the dividend at 41 euro cents. Instead investors’ confidence was dented by concerns over demand for the company’s products during the rest of the year, particularly in the US market.

Trump’s oil threat

WTI prices rose 8% after President Trump made a threat to Iran, telling US warships to destroy any vessels that posed a threat. That is all well and good but works only for those who don’t know that the WTI storage bottleneck is actually happening in the US and that most of the overproduction causing WTI prices to be as low as they are, are either domestic or comes from very high Canadian imports and not the relatively low Iranian output.

The key piece of data today that will determine the demand for WTI will not be Iranian vessels but US initial jobless claims, because that will be the real reflection of both transport demand and what other demand there will be over the coming weeks.

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