Normally, a weak exchange rate is good for the internationally-focused FTSE 100 but today a flare stuck up the Footsie’s fundament would not propel it into positive territory
- FTSE 100 falls 164 points at close
- US indices slide
- Sterling lower against most major currencies
5.00pm FTSE loses 164 points on Freedom Day to close 2.3% lower
The FTSE 100 finished Monday down 164 points or 2.3% to hit 6,844 as the UK’s supposed ‘Freedom Day’ fell flat in the eyes of investors.
“Today was supposed to be a landmark day where the UK economy finally shook off the handbrake of Covid-19 restrictions,” commented chief market analyst Michael Hewson at CMC Markets UK. “Instead of a story of vaccine success it has turned out to be, not only a political shambles, but a big market sell-off over concern about the effect rising hospitalisations, along with big increases in the numbers of people self-isolating will have on the recovery story.”
Hewson added: “These rising virus concerns have rippled out across global markets with European markets sliding sharply, the DAX hitting a two-month low, and the FTSE100 set to close at its lowest level in three months, with nearly all sectors in negative territory.”
3.24pm Pound down against major currencies
Whatever you think of the decision to further ease lockdown restrictions in England, one would expect the market to look forward to an economic boost.
It’s curious, therefore, that sterling has lost six-tenths of a cent against the US dollar at US$1.37 – a fall of 0.5% today, taking the three-month decline to just over 2%.
Against the euro, the pound is down 0.6%; against the Japanese yen, it is off 1.3% and against the Chinese yuan it is 0.3% lower.
It’s giving the Brazilian real a pounding, however (up 1.0%) and is up 0.7% against the Canadian dollar.
“It’s difficult to have a conversation with anyone here in the UK without a debate as to whether the UK is correct to lift all legal Covid restrictions today with cases surging through the population. Those for suggest that with all the vulnerable groups fully vaccinated and every adult having been offered at least one jab then we have to start learning to live with the virus and the summer is the best place to start,” said the ever reasonable Jim Reid at Deutsche Bank
“To delay would only postpone cases and risks the peak occurring in winter when the health service is usually more stretched. Mental health considerations also come into the equation as does the still relatively low death rate.
“Those against will suggest that fully reopening now after the recent surge in cases could soon lead to high hospitalisations and genuinely risk pressurising the health service. They would also argue that new variants could emerge with such a wide prevalence of cases and could also create huge numbers of long Covid cases and more deaths than…
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