The FTSE 100 was set to bounce back from yesterday’s brutal session despite concerns about the spread of the Indian covid variant in the UK.
Shares fell heavily yesterday although they did manage a partial recovery from the morning’s inflation-fuelled lows.
Today that improvement was set to continue, with the FTSE 100 being priced up 45 points at 7000 in pre-market trading on the IG platform. Encouragingly, 72% of traders were long on that price, suggesting the rebound could be even healthier.
The ongoing push-pull factor in markets is all about how central banks respond to the growing economic recovery.
Having had countries on life support with emergency low interest rates and quantitative easing, the question is: how and when will they taper it off?
Any signs of tightening is likely to trigger a massive selloff in share prices and spook business confidence, but a failure to taper risks overheating economies and breakaway inflation.
That tension, fuelled by high inflation and factory gate prices in the US, has meant for an extremely volatile week.
Investors assessing whether to put money at risk in these markets today have the added complication of whether or not to trust the “reopening trade” - the idea that leisure and retail industries will experience a boom from Monday’s full reopening of pubs and restaurants and other leisure facilities.
Cases of the Indian variant of Covid have more than doubled in a week, leading scientists and Dominic Cummings to call for Monday’s reopening to be postponed.
Public Health England yesterday said 1313 cases of the variant were identified this week, up from 520 last week. London and the North West are worst affected, with more than half of cases.
The risks of trusting reopening forecasts was laid bare yesterday as Portugal looked set to ban holidaymakers until at least the end of the month, reversing its status as the only major European holiday destination on the government’s green list of places Brits could visit.
Tui and EasyJet shares could come under pressure as a result as they both had laid on extra flights to the country in anticipation of huge demand.