FTSE swings in narrow channel

The rising number of corona cases in the southern parts of the US, particularly among the younger population, and the sharp loss on Wall Street on Friday made investors stop and rethink the rising trend in US stocks since April.

The FTSE is trading within a narrow channel this morning, mostly lower, with little corporate news to help the index out of the rut. Pharma companies are among the top gainers, as are housebuilders and retail stocks, a week into the reopening of shops in the UK. For the same reason delivery group Ocado is losing ground as shoppers return to the high street, albeit in modest numbers.

The Wirecard scandal is beginning to spill into the British market after many of the users of the banking app powered by the Wirecard Solutions Technology, a UK subsidiary of Wirecard, have had their accounts frozen since the company filed for insolvency Thursday.

Diageo joined a group of the largest UK consumer goods firms pulling their advertising from Facebook and Twitter over the social media platform’s lack of action on racial issues.

Pound dips ahead of Brexit trade talks

The pound dipped at the start of the day but then recovered to trade marginally higher than over the weekend as the UK went into a fresh round of Brexit trade talks in Brussels. Investors are not holding out much hope for a positive outcome of this round of trade talks, particularly as the Prime Minister has repeatedly said that the UK is ready to walk away from the EU without a trade deal . The medium term trend of the pound’s decline against the dollar remains intact and sterling also hit its lowest point against the euro in three months.

Meanwhile, the UK will sell a record £275 billion of bonds by August, more than twice the amount of borrowing in the whole of the past financial year, to pay for the massive government spending program during the corona outbreak.