Optimism on Europe virus spread lifts FTSE

Fragile hope that the coronavirus may have done its worst in Europe is helping lift London stocks and is boosting the performance of other European indices.

Charts (5)

Fragile hope that the coronavirus may have done its worst in Europe is helping lift London stocks and is boosting the performance of other European indices. For a few days running the number of new cases in the worst hit countries Italy, Spain and Germany seems to have plateaued out, helping investors see an eventual end date for the lockdowns across the continent.

Rising up the FTSE ranks are companies that have been worst hit by the pandemic; airlines, cruise operators, hotels and related service providers. Investors are also looking at consumer-facing firms like home builders and clothes and sports retailers, their assessment being that these stocks may have fallen as low as they would in this crisis and that it is time for some bargain hunting. A word of caution though; throughout the spread of the corona across Europe, the UK has trailed a week to ten days behind Italy and Spain, and the health situation at home may yet become worse before it genuinely improves.

Pound recovers from PM shock

Boris Johnson’s deteriorating health condition which saw him moved into an intensive care unit last night caused a ripple of shock for the pound which dropped against the dollar and the yen. The big question was who will lead the UK while the PM is hospitalised but as Foreign Affairs Secretary Dominic Raab stepped into this position, he gave the impression that throughout Johnson’s absence it will be more or less business as usual.

This morning’s rally in stocks changed the mood in the currency markets and sterling is now trading up nearly 0.9% against the dollar.

More from Indices

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.