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Daily wrap up 12 July 2021

12 Jul 2021 05:07 PM

It has been a relatively quiet day as there has been little in the way of economic news to spark excitement. The mood is positive but there are some mild worries about the rising number of Covid-19 cases. In Japan, a state of emergency has been declared in Tokyo, and tighter social distancing guidelines have been implemented in Seoul. Closer to home, England is due to remove the last of its restrictions next week, but coronavirus case numbers have been rising lately and there are some worries the health situation will be accelerated on account of the European Football Championship.

In London, travel, hospitably and transport stocks are in the red. Companies like, Ryanair, easyJet and Wizz Air, are suffering due to fears that fewer people will take flights. On a similar footing, transport firms such as National Express and FirstGroup are down as dealers take the view that people will try and avoid public transport. The pub groups are in the red too for similar reasons, JD Wetherspoon and Mitchells & Butlers are showing small losses. Broadly speaking, European indices are holding up well, but considering the sectors mentioned above are suffering, it suggests traders are fearing the worst.

Over in the US, dealers continue to be bullish as the S&P 500 has notched up another record-high, the NASDAQ 100 is not too far away from its all-time high, and the Dow Jones hit its highest mark since May. Like with China, we have seen some indication that the US economy is moving down a gear but at the same time, it is clear the Federal Reserve have no plans to tighten monetary policy in the near-term. Even though the Fed do not appear to be in any rush to lift rates, the bank seems to be more comfortable with the prospect of tightening than most other major central banks, which is helping the US dollar today.       

WTI and Brent crude are down over 1% today as uncertainty hangs over demand prospects. The rise in new coronavirus cases has triggered fears that demand might be hurt because of another potential wave of the pandemic. At the end of last week, the central bank of China lowered the reserve requirement ratio – that was a clear sign the authorities are nervous the rebound is fading – so there is chatter other countries could be in a similar situation. China is one of the largest importers of oil in the world in the world, hence the underperformance of the energy.

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