FTSE dashed by Fed WHO comments

Two high level comments are reverberating through the markets this morning, pulling the FTSE and European gauges lower. Fed chairman Jay Powell warning that the US could be facing an extended period of weak economic growth affected both European trading and trading in Asia. He also urged Congress to spend more or face a period of historic economic turmoil.

Dashing hopes that the pandemic will be resolved quickly, the World Health Organisation’s Emergencies Director Michael Ryan said that the coronavirus may never go away and instead become just another endemic virus in the community.

Retail speculators boost investment firm stocks

In London, stocks that are typically the worst hit by the coronavirus came under renewed pressure, notably airlines, housebuilders , banks and insurance firms. The negative broader picture weighed on property firm Persimmon even though the firm is about to reopen its offices at the end of this week and 65% of its construction work is back up and running.

But these distressed times are also offering opportunities such as private equity firm 3i Group and distressed buyer Melrose Industries. 3i shares are the flavour of the morning after the firm said it would still pay out its dividends for 2020 despite returns on its private equity business dropping by over 30%. The hardest hit have been its investments in the travel and the car sector.

The extended lockdown and the shares meltdown has created a vast surge in retail trading activity over the last two months with trading broker Hargreaves Landsdown experiencing the influx of an additional £6.3 billion from investors. Strong results mean that the firm will be able to stick to its planned dividend payout for this year.