The FTSE 100 made a subdued start to the week as global markets took stock of the bull run in share prices that has been in play since November’s vaccine breakthroughs.
The market surged through 7000 recently, only to plunge last Tuesday, since when it has been nervously edging up.
Today it opened up just 10 points at 6948.63 despite a fairly strong finish on Wall Street on Friday night and a 0.5% gain this morning in the Japanese Nikkei index.
Despite the Japanese gains, it was mixed picture in Asia, with the Hang Seng Index in Hong Kong flat and Chinese stocks up around a fifth of a percent, giving few cues to London traders.
The covid vaccines programme in Europe appears to be gathering pace, but markets have been concerned about the devastating surge in India which has been concerning investors.
Markets are wary both of the impact on the Indian economy and supplies from the country, but also the potential for new variants to spread from the enormous population there.
Few investors were taking big trading positions yet in a week that will see crucial earnings figures for Big Tech companies which could send markets in either direction and the two-day Federal Reserve meeting.
Investors assume Fed chairman Jay Powell will stick to the stance of super-easy monetary policy despite signs of rising inflation but markets will be hanging on his every word at Wednesday’s press conference.
As well as near-zero interest rates, the Fed is buying $120 billion of assets a month, and investors are wondering when that bond-buying programme will begin to taper as the world’s biggest economy begins firing again.
Powell has repeatedly said he will not act until a sustained jobs recovery is clearly established but he has said this month that an “inflection point” is underway in the US economy.
London markets took some heart at news at Tate & Lyle’s potential £1.2 billion sale of its US focused primary products division, making bulk sweeteners and industrial starches, in what would be the biggest overhaul for the group in years.
The company last night said it was in talks with potential new partners who might be interested in buying a controlling stake there and shares gained 6%.
The Sunday Telegraph reported that Apollo Global Management and Cerberus are in talks with the group.
The week ahead sees first quarter profit figures reported from Google parent Alphabet, Amazon, Apple, Facebook and Google, with expectations they will announce profits of a combined $65 billion in the three months to the end of March.
Travel and hospitality firms have seen their shares leap from Covid lows in the past six months but those gains could come into question as big employers say they will curb business trips after the pandemic. Remote meetings over Zoom have been found as effective, and thousands of pounds and dollars cheaper, than face-to-face summits and conferences, while also being better for companies’ carbon footprints.
HSBC chief executive Noel Quinn told the FT he would be cutting his own travel by half to lower the number of flights he takes. Other CEOs have echoed that sentiment, which, if it becomes the new normal, could have a devastating long term impact on companies like IAG, whose British Airways airline relies heavily on long haul business travellers for profits.
Shorter term, however, it was decent day for travel stocks, with IAG leading the FTSE risers, up 4% and aero engines maker Rolls-Royce up a similar percentage.
Banks will doubtless be questioned over their WFH plans this week as they report quarterly profit figures. Sector investors, however, will be keenest to hear news on dividends and profit growth from HSBC, Lloyds, NatWest and Barclays, all reporting in the coming days. Big divi payouts are expected.
BP reports results tomorrow with investors hoping for news on share buybacks after it hit its debt reduction targets earlier than expected.
Other FTSE share price risers were Evraz, Pearson and Informa.
Fallers were Ocado, Pershing Square and United Utilities, but none fell more than 2%.