FTSE slides as PMIs show extent of economic damage in Europe
Fiona Cincotta April 23, 2020 11:21 AM
Mixed company reports and data showing the extent of the coranavirus damage on European economies has knocked the FTSE slightly this morning causing the index to drop 0.4%
Mixed company reports and data showing the extent of the coranavirus damage on European economies has knocked the FTSE slightly this morning causing the index to drop 0.4%. But it was not all bad news. UK house builder Taylor Wimpey helped lift other property companies and DIY specialists with its plan to return to construction in steps from May 4. The firm said that its order book has grown on last year and that its cash position remains strong.
A number of FTSE firms focused on the domestic retail market also traded higher in anticipation of further government care packages and support. The UK government now plans to raise £180bn over the next three months to plug the gap created by its lenient tax collection policy during the lockdown.
Aerospace component maker Meggitt lead the FTSE gainers after it reported a revenue increase in the first quarter while vowing to cut 15% of its workforce.
Unilever shares struggled this morning despite the firm reporting a rise in first-quarter turnover and keeping the dividend at 41 euro cents. Instead investors’ confidence was dented by concerns over demand for the company’s products during the rest of the year, particularly in the US market.
Trump’s oil threat
WTI prices rose 8% after President Trump made a threat to Iran, telling US warships to destroy any vessels that posed a threat. That is all well and good but works only for those who don’t know that the WTI storage bottleneck is actually happening in the US and that most of the overproduction causing WTI prices to be as low as they are, are either domestic or comes from very high Canadian imports and not the relatively low Iranian output.
The key piece of data today that will determine the demand for WTI will not be Iranian vessels but US initial jobless claims, because that will be the real reflection of both transport demand and what other demand there will be over the coming weeks.
StoneX Financial Ltd (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.