The FTSE 100 was set to fall again today, giving back some of its recovery from Tuesday’s rout as jitters remained about the Covid pandemic’s impact on demand for companies’ goods and services.
The European Central Bank set the tone yesterday as Christine Lagarde cautioned that the economy on the continent was set to rebound strongly but remained fragile, requiring continued strong monetary policy assistance.
In the UK, there was some positivity with a survey this morning from GfK showing consumer confidence has leaped to its highest level since the first Covid-19 restrictions.
The confidence barometer was calculated from polling largely done in the fortnight before the April 12 reopening, suggesting it could just be the start of a strong consumer recovery.
However, much of that will continue to depend on the rollout of the vaccination programme across the younger age groups in order to boost sectors like hospitality and travel that may require vaccine passports to open up in future.
Reports today said UK government advisers are split over whether to recommend the AstraZeneca vaccine to under-40s sue to the rare blood clotting condition linked to it. The Joint Committee on Vaccination and Immunisation has already recommended the under-30s be offered an alternative where available. That raises the prospect of the rollout slowing.
The FTSE 100 was set to fall 23.5 points to 6911, according to traders betting on the IG broking platform. That would take it further away from the 7000 level it managed to push through this month, although it remains significantly higher than Tuesday’s 6858 trough.
UK and European stocks were expected to take a lead from a Wall Street selloff last night triggered by Joe Biden’s reported plan to hike capital gains tax for wealthy Americans.
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The President is said to be mulling moving up CGT for those earning $1 million a year or more from 20% to as much as 43.4% for the wealthiest.
Shares tumbled on the back of the reports, even though, as CMC Markets analysts pointed out, such a bold move would be unlikely to pass through Congress. “However, in these highly uncertain times, it doesn’t take much to spook a little profit taking.”
Retail sales figures out this morning will give a further view on the picture for consumer facing sectors in the UK. The data for March is expected to come in at a gain of 1.5% against February’s 2.1% rise.
Garden centres are expected to do well, as they did in the previous month but the overall picture will be gloomy due to lockdowns. However, in such a rapidly changing situation, historic data looks out of date more rapidly than ever. The second quarter of the year should be far more sunny, and that is what most investors are focusing on.
Public sector borrowing figures for March, also out today, should show another grim post-war record as tax receipts remain weak in the stricken economy. Borrowing for the fiscal year to March could move above £300 billion, with expectations of a further £22 billion in the month.
CMC points out that this is not as bad as had been forecast a few months ago, with businesses who can afford to paying back their government furlough money and business rates support.