FTSE100 and S&P both up as markets continue to react to social measures, rather than monetary policy
Markets rise as UK is locked down
- FTSE 100 is currently up roughly 3.7% and the S&P is pointing to roughly a 4.5% higher open
- The primary data markets are reacting to is the number of new cases and deaths, rather than monetary and fiscal policy
- If the UK public react as they should we may start to see the curve flatten, which should provide markets the solid floor they are so desperately craving
Markets rebounded in early trading today following last night’s announcement of an effective UK lockdown, something most UK policymakers have been pushing for the last week as the nation tries to reduce the spread of the virus. For the last few weeks we have said the primary data markets are reacting to is the number of new cases and deaths, rather than monetary and fiscal policy. This highlights our view that some investors are starting to see light at the end of the tunnel. Of course, there remains uncertainty ahead but it seems we are starting to take steps in the right direction for the UK economy.
All of this is also coming alongside yesterday’s announcement that the Fed ‘is willing to do whatever it takes’, something that helped prop up Asian markets earlier today. News that Hubei, the epicentre of the outbreak, has started to relax travel restrictions could be a key milestone in the virus saga for either good or for worse.
Taking this see-saw view off the table, from a broad perspective it’s clear some optimism is being priced back in. Despite the continuing spread of the virus, the FTSE 100 is currently up roughly 3.7% and the S&P is pointing to roughly a 4.5% higher open. What is also important to note is this is now not just the Government’s priority but society’s priority. If the UK public react as they should we may start to see the curve flatten, which should provide markets the solid floor they are so desperately craving. This is the key catalyst for markets to start their recovery after what has been one of the greatest shocks of this generation.
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