Market News & Analysis


Top Story

Lockdown Easing Overshadows Second Wave Fears & Terrible US Data

Following in the footsteps of Asia overnight, European bourses are pointing to a stronger start on the open, shrugging off horrible US jobs data from last week. Risk appetite is being boosted by the prospect of more countries easing lockdown measures, even as some reported a pickup in covid-19 infections.

Germany, Iran, China and South Korea have all reported an increase in coronavirus cases after lock down measures have been eased. In Germany, the Robert Koche Institute warned that the R rate, or reproduction rate was back over 1.1 increasing concerns that Europe’s largest economy could have eased lockdown measures too soon.

Concerns of a second wave of infections will limit advances in the market. However, this is being overshadowed right now by the prospect of more people returning to work and demand for goods and services returning after lock down measures caused demand to evaporate overnight.

Immune to horrible data
The markets are showing an extraordinary ability to focus on the positive whilst proving to be immune to terrible data. Stock indices across Europe and the US closed higher on Friday despite data revealing that 20.5 million US jobs have been lost and the unemployment rate striking 14.7%. There is a strong feeling that the worst is behind us which boosting risk sentiment. However, the current optimism combined with fear of missing out raises doubts over whether the markets are truly comprehending what 14.7% US unemployment means. 

Boris Johnson eases lockdown measures
The Pound is pushing higher, versus both the US Dollar and Euro and investment confidence in the UK is expected to receive a boost after Boris Johnson eased lockdown measures in England and as the number of coronavirus daily deaths were at the lowest level in a month. People in England can now exercise outside more frequently whilst those who haven’t been able to work from home are encouraged to return to work today. Construction sites and manufacturing plants will start reopening whilst those working from home are encouraged to still do so.  After 7 weeks in lock down there is finally some visibility as the PM laid out a three-stage plan to easing lockdown measures.

Furlough scheme extension?
Adding to the improving mood, rumours are also circulating that Chancellor Rishi Sunak will extend the government’s hugely popular job retention scheme until September. This will be at 60%, rather than the current 80% although it will also include topping up staff’s pay packets who are going back to work on a part time basis. There is no question that this is a hugely expensive scheme for the government. However, it has also proved to be extremely popular and could go a long way to ensuring that consumer confidence returns quickly which will be essential for any chance of a rapid recovery for the UK economy.

There is no high impacting data due for release today. Week long Brexit trade talks kick off today and could drive the pound. 

FTSE Chart


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.