The phrase ‘out of the frying pan and into the fire’ springs to mind when watching the FTSE fall and then rise on Thursday, with the UK index taking some comfort from the day’s developments – even with the challenges that lay ahead.
Between the first bit of vaccine-related optimism in a long time, and Chancellor Rishi Sunak’s new assortment of support scheme patch-ups, the FTSE recovered from its five-month low, when it hit 5,726 points during the morning.
Speaking on the index‘s movements during the day, Spreadex Financial Analyst, Connor Campbell, said: “The midday rebound seemed related to good news out of the Oxford vaccine trials, with reports that it was prompting a ‘strong immune response’ in patients.”
“Then there was Rishi Sunak’s announcement that the government is extending the furlough replacement scheme, by launching a new grant scheme for companies in areas under tier 2 restrictions while making changes to the level of employer contributions and number of hours an employee must work for a firm to be eligible.”
This news saw the FTSE 100 bounce from its initial 50 point drop, up to an end of day rally of around 10 points, or 0.16%, to 5,785. More bullish was the FTSE 250. Having dropped by over 100 points to begin with, the index then mustered a 0.60% rally, up to 17,894 points.
However, the broader outlook is less positive than today’s developments might suggest. With no clear news on when a vaccine can be expected, and changes in political policy making another potential lockdown difficult to price in, there is certainly room for further downward pressure between now and Christmas. Campbell adds on the day’s developments:
“Yet this had only a limited impact on investors’ disposition. The markets remain deeply worried by the scope and scale of rising covid-19 cases and subsequent restriction measures around the world, but especially in Europe.”
This worry was reflected in Eurozone equities, with the DAX dropping 0.12%, to 12,543 points, and the CAC trying its best to recover, but ultimately finishing with a marginal dip of 0.053%, down to 4,851 points.