FTSE declines for second day in a row as virus fears dampen Sunak’s splurgeOn July 8, 2020 by Thomas Belayneh
UK blue chips declined for the second day in a row, as daily coronavirus case numbers continue to set new records in the US, weighing on investor sentiment. This was despite UK chancellor, Rishi Sunak, announcing a raft of new fiscal measures to support the economy, which included a 15% VAT cut for the tourism and hospitality sector.
The FTSE 100 declined by 0.55% to 6,156.16, after falling almost 1.5% the day before as investors continue to wrestle recent surprises in economic data with uncertainty over the epidemiological outlook on Covid-19.
After reaching a three-month high on 5th June, following a rampant 30% rally from March lows, share prices have stagnated as reversals of reopening plans in several countries prompt questions over whether expectations for a swift economic rebound still hold merit.
Even as PMIs and employment reports continue to come in ahead of expectations, market participants are rightly questioning what other catalysts, beyond the ‘easy’ boost that stems from loosening restrictions, exist to sustain the rapid recovery in output.
Strong forward guidance on sales and earnings, as firms publish their Q2 results in the coming weeks, may be the key to unlocking this market impasse and potentially unleashing further upside moves.
As US markets opened at 1.30pm, risk-off sentiment caused precious metals to rise precipitously with silver up over 2% on the day. It was no surprise then that Fresnillo, the world’s largest producer of Silver from ore, led the FTSE 100 higher rising 2.64% to 908.6p.
Barclays Capital rose its target price on the stock from 600p to 800p this morning.
Following news of a partial management buyout of WPP-owned Finsbury, WPP declined 5.35% to 591.4p as investors bemoaned the lack of disclosure on the price that the advertising giant received for its 49.9% stake.
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