Summary
- UK shares have been largely subdued, especially in last three weeks
- FTSE 100 stands with a marginal gain of 0.55 per cent in May 2021
- Investors remain cautious ahead of US GDP data and jobless claims release
UK shares have remained largely subdued, especially in the last three weeks with the benchmark FTSE 100 index reversing almost all the gains of May.
The apparent fears of rising inflation in the United States, partly reflected by other nations including Canada, United Kingdom and Japan, the tech slide on Nasdaq Composite in the second week of May and the persisting uncertainty with regard to the so-called economic recovery has kept investors on the edge.
According to historical data available with the London Stock Exchange, FTSE 100 stands with a marginal gain of 0.55 per cent in May 2021.
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The index touched an intraday low of 7,008.53, down 0.26 per cent from the previous close of 7,026.93. The key index reclaimed the level above the psychological mark of 7,000 in the middle of April, but has failed to sustain it for a longer stretch.
FTSE 100 chart (May 2021)
Image Source: REFINITV
On Thursday, 27 May, the mid-cap constituted FTSE 250 traded slightly higher, extending the previous day’s gain, while the wider benchmarks including FTSE 350 and FTSE All-Share hovered in a largely similar manner.
The market participants have remained unnerved with the ongoing developments on the global front, while the domestic economic progress have duly backed the recovery with all the major macroeconomic indicators suggesting a sharp bounce back from the Covid-laden downturn.
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This seems to be the case of “sell in May and go away” as a large section of investors have moved away from equities following a major collapse in the cryptocurrency market with the value of bitcoin. The most popular crypto-asset nosedived nearly 50 per cent from its all-time high after the Chinese government reinstated the strict stance against all the financial institutions providing transactional services to crypto dealers, as well as the traders.
The crypto market further crashed reacting to the livewire commentary by Elon Musk and Tesla Inc (NASDAQ:TSLA) discontinuing the usage of bitcoins for buying its products. According to several market pundits, the crypto crash evidently affected the equity market sentiments in a longer run with the investors shifting their focus to upcoming macro releases.
The investor class remains cautious ahead of the major releases in the US, sending the futures linked to the Dow Jones Industrial Average (DJIA) in the negative zone. The US Bureau of Economic Analysis and the US Department of Labor are slated to announce the GDP data and the number of jobless claims later today. With an expectancy of a bleaker opening on Wall Street, London equities continued to trade in the red.