UK stock markets are likely to start largely unchanged on Tuesday, 12 January, as the resurfaced fears over tighter restrictions due to rising coronavirus cases in the United Kingdom, Wall Street concluding in the negative region and mixed-bag Asian cues have once again developed a lackluster environment for London equities.
Equities turn lackluster
The present regime of national lockdown can be modified with a new arrangement that is likely to bolster the government’s objective of arresting the invariably rising cases and daily hospital admissions.
The benchmark FTSE 100 index settled at 74.78 points, or 1.09 per cent lower at 6,798.48, after opening marginally lower, surrendering a major chunk of the weekly gains. The index touched a low of 6,768.72, during the day, tripping from its 10-month highs with the Great Britain Pound (GBP) slipping nearly 0.50 per cent.
At the “worst point”
Health Secretary Matt Hancock on Monday said that the newly mutated strain of virus is putting additional pressure on the NHS as it is “highly contagious”. The number of people that are in hospital due to coronavirus has grown by 22 per cent from last week to 32,394. Meanwhile, the Chief Medical Officer also warned that the country is at the “worst point” of the coronavirus pandemic and the expected normal life is “a long way away”.
Health Secretary purportedly said that the authorities are ready to take further actions if required, clearing the apparent speculation over more restrictions in the near future. The renewed worries with regard to the Covid-19 cases in the UK and day-after-day surmounting pressure on the NHS is seemingly choking the functioning of the healthcare system.
A notion of tighter restrictions and the likelihood of stiffer curbs across the streets of the United Kingdom can have the true potential to affect the business, as well as the market sentiments in a big way.
The markets have surged ahead in the first week of New Year 2021, defying the national lockdown blues. But a further directive to downsize the operations from the government can be critical for most of the enterprises. The market participants were already in an awe ahead of the corporate results, a move towards tighter restrictions can seriously fabricate the commercial activities.
GBP regains slightly
The GBP vs USD pair traded in green on Tuesday, staging partial recovery from the lost ground on Monday. At around 06:29 GMT, the GBP to USD pair was trading at 1.3544, up 0.22 per cent from the previous close of 1.3514. The currency pair has oscillated between a range of 1.3505 and 1.3547, during the day so far. The Bank of England had fixed a foreign exchange reference conversion rate of 1.3590 USD and 1.1088 EUR against a unit of pound sterling on 8 January.
GBP vs USD (12 Jan)
(Source: Refinitiv, Thomson Reuters)
The safe-haven market also staged recovery on Tuesday with an ounce of gold trading 0.74 per cent higher at $1,856.98 from the previous close of 1,843.28. The Brent crude oil traded 0.32 per cent higher at $55.84 per barrel, while a barrel of WTI crude traded at $52.44, up 0.36 per cent from the previous close.