FTSE 100 set to rise despite worry over Covid lockdown extensions

·2 min read
Coronavirus – Mon Jun 14, 2021 (PA Wire)
Coronavirus – Mon Jun 14, 2021 (PA Wire)

The FTSE 100 Index was set to gain around 20 points today despite concerns about the lack of support being offered to companies facing heavy losses from the one-month delay to the end of Covid lockdown measures.

Traders had been well prepared for the bad news and have, to paraphrase Boris Johnson, “learned to live with Covid”.

Markets remain at near all-time highs as central banks continue pumping stimulus into their economies. The FTSE 100 was set to scale further heights towards 7200 today, with IG platform traders expecting a 19 point gain to 7176 at the opening of trading.

City investors largely agreed that the extension in lockdowns to July 19 made sense but the leisure and hospitality sectors argued that it was unfair that the Covid support packages they had received should still begin tapering out when they were not allowed to trade normally.

July will see them have to contribute 10% towards furlough costs and begin paying some of their business rates. The Federation of Small Business wants the furlough taper delayed and is calling for bounceback loans to be written off for businesses that are still closed.

The government Covid support packages have seen most companies in trouble forced to take on huge debts as they have focused on loans rather than grants. The worry is that they will struggle to meet their loan repayments and face a fatal cash squeeze, particularly if they are hit by wage inflation and other increased input costs.

Among the big companies of the FTSE 100, however, international, macro issues are what affects share prices more. Here, the continued driver of loose monetary policy sending investors into equities for want of anywhere better to get a yield continues.

Asia stocks gained today, following from Wall Street’s strength last night. Traders expressed some concerns that the Federal Reserve may indicate some hawkishness at this week’s policy meeting, but the bulls remain firmly in charge.

Intermediate Capital Group could receive some attention from stock pickers after broker Numis praised it in a note for clients after its recent strong set of results. The finance provider’s funds were “very much in demand” among customers, it said, praising ICG’s aspiration to get $100 billion of assets under management - a 79% increase on its current size.

Numis advises investors to hold onto the stock, saying the current value reflects the group’s strong position.

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