FTSE 100 futures marginally higher as UK stocks continue recovery

FTSE 100 futures are trading slightly higher after market close, with UK stocks continuing their slow but steady recovery, despite worrying levels of borrowing amid the coronavirus pandemic.

‘Stocks have risen throughout the week, continuing to claw back the losses suffered last week,’ Chris Beauchamp, chief market analyst at IG said. ‘Once again some better data, supportive actions from central banks and a continuing sense that earnings will recover later in the year have driven a move higher in equities.’

‘Sentiment remains sceptical that the market can keep moving higher, which provides one of the best reasons to expect further gains over the longer term; one thing is for certain, for now the market appears it can handle the prospect of the long-term existence of coronavirus, provided there are enough government and central bank stimulus measures in place to offset the economic impact of lockdowns,’ he added.

The FTSE 100 closed out the week 3% higher at 6290 points.

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Second wave fears weigh on FTSE 100 recovery

Despite a relatively positive performance for UK equities this week investors remain wary about the prospect of a second wave of infections forcing the government to reintroduce stricter lockdown measures.

The blue-chip index could see its recovery stalled by worrying figures coming out of the US where the number of confirmed new Covid-19 cases increased by 27,800, representing a 21.3% increase from a week ago.

‘The trend is clearly rising, and new cases likely will jump by more than 30K today, for the first time since 1 May,’ Ian Shepherdson, chief economist at Pantheon Macroeconomics said. ‘Almost all the increase is in the South, though cases are rising in California, Oregon, and Utah too.’

‘The proportion of positive tests jumped to 5.8% yesterday, the highest since 27 May, and the trend appears to be rising. Test numbers continue to increase slowly,’ he added. ‘The flat trend in U.K. cases continues. Deaths and hospitalisations are falling, though the rate of decline of the latter has slowed.’

FTSE 100 drifts sideways

The FTSE 100 price has moved sideways for several days now, holding close to 6300 over the last four sessions but unable to break above it.

‘Meanwhile, some small downside was held at 6150, providing a first ‘line in the sand’ in the event of any push lower. If this is broken then 5950 comes into view,’ Beauchamp added.

‘Alternatively, a rally through 6300 could mark a resumption of the longer-term move higher, opening the way to 6400 and then 6500.’

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