FTSE dashed by Fed, WHO comments

Two high level comments are reverberating through the markets this morning, pulling the FTSE and European gauges lower.

Downtrend 1

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.

More from Indices

Related Articles

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.