FTSE 100 pushes higher as Europe prepares to relax coronavirus lockdowns
The FTSE 100 moved higher today as traders reacted to positive signs that European countries were preparing to ease coronavirus lockdown measures.
The UK blue-chip index posted a rise of 1.4 per cent , or 81 points, to 5,833 by around 11.30am.
The FTSE 100’s upbeat start to the day was more than matched by European stocks. France, Spain and Italy all signalled an easing of their coronavirus lockdowns.
Germany’s Dax leapt 2.6 per cent despite Chancellor Angela Merkel’s call for caution as the country eased some measures.
France’s Cac surged 1.9 per cent and the pan-European Euro Stoxx 600 jumped 1.7 per cent.
Europe looks towards end of lockdowns
FTSE 100 traders enjoyed a confidence boost from France, Italy and Spain all signalling the easing of their coronavirus lockdowns.
Italy, where restrictions have been in place for seven weeks, has set a date for bars and restaurants to reopen. Its daily infection rate is now falling after recording the highest number of deaths in Europe.
It will begin a phased end to the lockdown from 4 May. Yesterday it reported its lowest daily death toll since March.
France is also set to debate an exit strategy this week as the country looks to relax coronavirus measures.
New Zealand is also set to lift its most stringent restrictions from midnight. Germany began its exit strategy last week, and has now made it mandatory to wear face masks outside.
“There is a feeling in the markets that things are starting to go back to normal, albeit at a very slow pace,” said David Madden, market analysts at CMC Markets UK.
However, the UK is not yet close to easing lockdown measures. Prime Minister Boris Johnson today warned the UK risks an “economic disaster” if it lifts restrictions too early. The PM warned this was because of the risk of a second wave of infections.
The biggest risers on the FTSE 100 included equipment firm Ashtead. The company leapt over seven per cent despite its profit warning as it said cash flow would remain positive. And British Gas owner Centrica and insurer Legal & General also posted rises of above five per cent.
Lockdown exit strategies light the way for UK
After being knocked by underwhelming coronavirus drug trials last week, banks, miners and insurers led the charge on the FTSE 100 today.
“What happens in those countries easing restrictions should be illustrative for the UK government,” Connor Campbell, a financial analyst at Spreadex, said. “[It] could help dictate what the returning Boris Johnson and his cabinet choose to do next.
“This is especially true of Italy – the first European country to go into lockdown conditions seven weeks ago. It is sure to be the most scrutinised nation when it comes to assessing what measures can be lifted, and when.”
Russ Mould, investment director at AJ Bell, said: “Investors are starting to be more hopeful that the virus has peaked in many parts of the world and so there will be a greater focus on reviving economies.”
“The journey back to normality is likely to be very long but every small step towards getting people back to work and not stuck indoors should act as a positive catalyst for stock markets.”
FTSE 100 rise mirrors Asian stocks’ gains
The FTSE 100 and European stocks’ upbeat mirrored similar gains in Asia today. Hong Kong’s Hang Seng index rose 1.91 per cent and the SSE Composite was up 0.29 per cent.
The Nikkei was up 2.91 per cent, spurred on by a new bond-buying stimulus package unveiled by the Bank of Japan (BoJ).
“The BoJ laid down the gauntlet to the Federal Reserve and European Central Bank, who both meet later this week, by raising its package of support,” Neil Wilson, chief analyst at Markets.com, said. “The BoJ will now buy unlimited government bonds (JGBs), catching up with market expectations, and is increasing how much corporate and commercial paper it buys.
“Indices remain in consolidation phase and risk rolling over as momentum fades, but the news today is quite positive.”
Boris Johnson returns to No 10, helping sterling
Sterling also climbed 0.6 per cent against the dollar and 0.3 per cent against the euro as Johnson returned to Downing Street.
The Prime Minister is back in Downing Street a month after he was diagnosed with Covid-19 and spent three nights in intensive care.
He is now facing pressure to outline the UK’s coronavirus lockdown exit strategy amid concerns about the economic impact of the pandemic.
In a speech this morning, Johnson said that despite an “urgency” to lift lockdown, moving too soon risked “economic disaster”.
“I refuse to throw away all the effort, and the sacrifice of the British people and to risk a second major outbreak and huge loss of life, and the overwhelming of the NHS,” he said.
“I asked you to contain your impatience, because I believe we are coming now to the end of the first phase of this conflict.”