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UK stock markets are likely to open lower on Friday, 15 January, as investors’ confidence has been once again fazed by the concerns over the global economic recovery. Most of the European nations are proceeding ahead with tighter restrictions with some considering to impose national lockdowns in order to de-escalate the pressure over respective health care departments by containing the recently-started spike in coronavirus cases.
Recovery turns murkier
Italy has decided to extend the state of emergency to the end of April, Switzerland has ordered a semi-lockdown, Germany administration is planning to impose a mega-lockdown, France has extended the 6pm-to-6am curfew, Spain has tightened restrictions in various areas, while Portugal went into complete lockdown from Friday.
Further, back home in the UK, the repeated disturbance in the businesses, travel and bitterly-affected hospitality sector is likely to weigh on the commerce in the near future.
London equities under pressure
With England under a lockdown, there are media reports around even stricter restrictions in some areas facing a sharp spike in Covid-19 cases. The benchmark FTSE 100 ended at 6,801.96 on Thursday, up 56.44 points, or 0.84 per cent from the previous close of 6,745.52. With yesterday’s gains, the headline index recouped some of its losses realised in the current week.
The United Kingdom’s trade deficit widening to nearly £5 billion in November 2020 from £2.3 billion in October is likely to play a spoilsport and will further add to the jittery of market participants. It has been the largest shortfall in the UK’s balance of trade since April 2019.
Biden’s $1.9 billion Covid-19 stimulus
Meanwhile, Joe Biden has announced a Covid-19 relief package to the tune of nearly $1.9 trillion to help the American economy steer through the deadly repercussions of the coronavirus pandemic. President-elect Biden has also outlined his priorities via a speech on Thursday evening. Under the new relief package for the United States, more money will be designated for a smoother distribution of coronavirus vaccine and the continuing mass scale testing.
Under Biden’s $1.9 billion Covid-19 relief stimulus, direct payments of $1,400 will be sanctioned to Americans with the weekly unemployment benefit being increased to $400 and it will be extended till the end of September. The direct grants of $1,400 will be added with December’s $600, effectively making it a round figure relief of $2,000.
Among the bunch of measures that will be incorporated by the soon-to-be-inducted Biden administration, the eviction and foreclosures moratoriums have also been extended through the September-end, while federal minimum wage has been stretched to $15 per hour.
GBP vs USD (15 Jan)
(Source: Refinitiv, Thomson Reuters)
GBP falls
The Great Britain pound (GBP) lost ground against the United States dollar (USD) on Friday with the pound sterling falling by nearly 0.20 per cent. At around 0754 GMT, the GBP vs USD pair was trading at 1.3666, down 0.16 per cent from the previous close of 1.3687. The Bank of England had fixed a reference exchange rate of 1.3634 USD and 1.1210 EUR against a unit of GBP on 13 January.
