Although the Bank of England told us yesterday that the UK economy will fall around 14% this year the FTSE opened on a surprisingly positive note, boosted by the prospect of the country beginning to reopen in some shape or form from next week. Hopes of a return to normal outweighed the BoE’s words of warning, projecting that unemployment could rise to 8% this year while the consumer price index drops to 0.6% with no recovery in sight until some point in 2021.
The UK housing market has ground to a standstill during the corona lockdown with houses losing on average 0.6% in value last month. But with some form of reopening from next week investors are beginning to buy into property firms such as Rightmove, betting that the housing market has seen the low for this year. Firms that depend on the footfall on the high street also traded higher this morning including JD Sports Fashion, Primark owner Associated British Foods and betting chain Flutter Entertainment.
BT’s decision to forsake dividend payments this year triggered a backlash from investors and the stock dropped 8.5%. The telecoms giant is not only trying to cut outgoings because of the pandemic but also wants to preserve cash to be able to invest into 5G and fibreoptic networks.
Crude oil rallies 14% on the week
After the heavy selloff in the previous weeks, crude oil prices stabilised, allowing the Brent crude contract to regain 14% this week as it traded mid contract, that is, sufficiently removed from the next contract expiry date. However, the largest drops happened recently around the 22nd of the month, when the WTI contract expires, so next week could see a renewed slide in oil prices.