FTSE bounces as reopening continues

The FTSE has a bit of bounce in its step Monday morning with the mood lifted as the gradual reopening of the country continues.

Charts (3)

The FTSE has a bit of bounce in its step Monday morning with the mood lifted as the gradual reopening of the country continues. Open markets, car dealerships and schools are opening their doors for the first time in almost three months and the majority of high street shops are getting ready to follow suit from June 15.

But once the UK’s lockdown is fully removed, trading could become more fractious as it will become clear which businesses managed to survive the pandemic without major damage. UK bankers expect that over 40% of the small to medium-sized businesses that were part of the government’s loan scheme won’t be able to repay those loans once the lockdown is lifted, and although the government is meant to guarantee those loans it will be down to the banks to pursue debtors through courts.

The FTSE’s rally is echoed across the bourses in Europe except in Frankfurt where the DAX is struggling, weighed down by a slump in Lufthansa shares.

Oil prices are trading in jerky moves, unable to decide on a clear direction as investors try and second-guess the outcome of the upcoming OPEC meeting. As before during the corona crisis, major producers are pulling in opposite directions with Saudi Arabia wanting to extend cuts and potentially deepen them from July while Russia opposes the idea, assuming that the pick-up in demand will clear the glut over the next two months. 

Ted Baker shares have dropped more than 11% after the fashion brand said it plans a £95m stock issue. Rolls Royce has bounced back after a selloff last week when a major shareholder offloaded 96.7m shares. With the reopening across Europe investors are more reassured that a slow pick up in manufacturing, business and travel combined with Rolls Royce’s drastic job cut programme will help the company recover relatively quickly.

More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account