- The UK prime minister has said ‘we want this lockdown to be the last’, boosting confidence that restrictions will be eased for good over the coming months.
- UK called to prioritise providing economic support rather than repairing public finances at its next budget, providing hope that financial support will continue.
- Meanwhile, the new boss of the WTO has stressed the world must avoid vaccine nationalism to deliver a proper global economic recovery.
- In forex, GBP/USD trades at its highest level in almost three years.
- Oil prices continue to head higher as a cold snap in Texas, US, adds to supply issues.
- The headline events in the economic calendar are flash estimates of GDP and employment in the EU and eurozone.
FTSE 100 to open higher
The FTSE 100 is set to open 0.4% higher this morning at 6789.3.
European markets struggle to open higher
France’s CAC 40 is set to open 0.1% higher at 5796.7.
Germany’s DAX is called to open slightly higher this morning at 14131.5.
UK prime minister wants this lockdown to be the last
UK prime minister Boris Johnson has called for patience among the population and said that it was ‘no moment to relax’ after the country successfully vaccinated 15 million of the most vulnerable people, but said he hopes this lockdown is the last.
Johnson is set to outline a roadmap to exiting lockdown next Monday, which is expected to start with schools reopening on March 8 and followed by a gradual easing of other rules.
Johnson said ‘we want this lockdown to be the last and we want progress to be cautious but also irreversible’. However, he also said there was ‘no cast iron guarantee’ that he wouldn’t have to plunge the country into further restrictions in the future.
Can rapid flow tests allow UK leisure and hospitality to reopen?
The rollout of the vaccination programme combined with rapid lateral flow tests could provide a path for cinemas, nightclubs and other social venues to reopen, the prime minister said.
Johnson said the tests could be by ‘those parts of the economy we couldn't get open last year’. That, combined with vaccines, will ‘probably be the route forward’. One area that could be left out is major public events, like festivals, after a government spokesperson said there is a ‘long way to go before we can get people back at big events safely’.
IFS stresses continued economic supports is more vital than repairing public finances
UK chancellor Rishi Sunak should prioritise providing continued economic support when he releases his budget next month rather than try to fix the public purse that has been ravaged during the pandemic, a study by the Institute for Fiscal Studies and Citi Research said.
The report said lower-income households were particularly at risk, especially if the furlough scheme is not extended past April, and that an end to the scheme could contribute toward a spike in unemployment. The report suggested the furlough scheme and other support packages are extended and gradually phased out.
It also said the wealthier were well-placed to help sort out public finances as they had accumulated £125 billion in savings during the pandemic, but also warned against any major tax hikes in the near-term.
Deliveroo IPO to happen in March
Deliveroo is thought to be preparing for a blockbuster stock listing next month and is targeting a valuation of up to £7.5 billion, according to Sky News.
The company is expected to announce its intention to float on March 8, although this is not a firm date, with shares set to be trading weeks later.
New WTO boss says vaccine nationalism must be avoided
The new head of the World Trade Organisation, Ngozi Okonjo-Iweala, said ‘a phenomenon where rich countries are vaccinating their populations and poor countries have to wait’ must be avoided as it could delay any hopes of a global recovery.
‘The nature of the pandemic and the mutation of many variants makes this such that no one country can feel safe until every country has taken precautions to vaccinate its population,’ she said.
Okonjo-Iweala said one way around this could be to allow licenses to be issued so vaccines can be produced by other companies, ‘so that you can have adequate supplies while still making sure that intellectual property issues are taken care of.’ This has already happened for the AstraZeneca jab, which has been licensed out to the Serum Institute of India.
French unemployment falls in fourth quarter of 2020
France’s unemployment rate fell to 8% in the fourth quarter of 2020 from 9.1% in the third, the latest data from INSEE showed.
The data showed there had been an increase in hiring during the period but that the figures had been skewed by the country’s second national lockdown between October 30 and November 15. INSEE said the lockdown meant less people were classified as unemployed than the previous quarter because they were unable to look for work.
President Emmanuel Macron has a target to get unemployment down to below 7% by the time his term ends in 2022, having inherited an unemployment rate of 9.5% when he was elected.
Forex: GBP/USD at highest level in almost three years
The fact the UK is starting to pull ahead in the vaccine race is being reflected in forex markets, with the pound finding support as markets prepare for the economy to start reopening next month. Meanwhile, the dollar continued to suffer weakness as markets try to figure out whether the US will be ahead or behind in the race to vaccinate everyone and get the economy back up and running.
GBP/USD was up 0.2% this morning at 1.39254, marking its highest level since April 2018.
EUR/GBP was broadly flat in early trade at 0.87162.
Meanwhile, EUR/USD was up 0.1% at 1.21383.
Analyst Fiona Cincotta looks at the price action of WTI as it appears ion overbought territory here.
Commodities: US cold snap and tensions in Middle East boost oil prices
Oil prices have continued to push higher after a wave of cold weather hit wells and refineries in Texas, the largest-producing state in the US, prompting further concerns about supply.
That builds on other supply issues stemming from tensions in the Middle East. Reports suggest fighting forces in Yemen being led by Saudi Arabia intercepted a drone controlled by the Houthis that are aligned with Iran. Since then, the Houthi group said it used drones to strike airports in Saudi Arabia, the world’s largest oil producing nation.
Brent was trading 0.3% higher this morning at $63.34 a barrel, while WTI followed 0.3% higher at $60.11.
Analyst Fiona Cincotta looks at the price action of WTI as it appears ion overbought territory here
The economic calendar kicks off at 1000 GMT today, when the eurozone’s GDP figures will be released alongside preliminary employment figures and the ZEW economic sentiment survey. Following the Eurogroup meeting yesterday, the Economic and Financial Affairs Council, the main decision-making body of the Council of the EU, will be holding an all-day meeting today.
The US Federal Reserve’s Michelle Bowman is due to make a speech at 1610 GMT.
There is Australia’s Westpac leading index at 2330 GMT and at 2350GMT Japan will release imports, exports and trade balance data.
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