Stocks Point Lower As UK Q1 COVID Damage Worse Than Forecast
Fiona Cincotta June 30, 2020 7:34 AM
The FTSE is lagging its peers following worse than forecast GDP data.
Europe is looking towards a mildly negative start as investors continue to weigh up rising coronavirus figures against signs of economic recovery and rising US – China tensions. The FTSE is lagging its peers following worse than forecast GDP data
QI GDP -1.7% vs -1.6% exp.
The FTSE is set to lag its European peers, opening in the red after Q1 GDP showed that the UK economy contracted by more than expected in the first quarter. Q1 GDP -1.7% yoy in Q1 worse than the -1.6% forecast. Quarter on quarter the economy contracted a worse than expected -2.2% vs -2% previously reported.
Given that the first quarter only included a week of lockdown, the worst is yet to come in, with economic growth in Q2 expected to be significantly worse given that the economy was paralysed for 2 of the three months. Today’s reading doesn’t bode well for Q2.
Following the release, the Pound has dropped back through $1.22 as it heads towards monthly lows.
Brexit talks are doing little to support sterling, with little progress on key issues and the UK insisting that an outline deal is ready by the end of July.
Attention will now turn to Boris Johnson and his plans to spend his way out of the pandemic crisis with huge infrastructure projects.
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