FTSE underperforms amid rising COVID cases in England
European stock markets were mixed on Thursday, with the FTSE 100 (^FTSE) underperforming against its peers as a new study warned the COVID epidemic was growing in England.
London’s benchmark index ended 0.4% lower after spending the session in the red, as a slump in mining stocks offset a small rally in the travel sector.
The French CAC (^FCHI) closed 0.2% higher and the DAX (^GDAXI) was 0.1% higher in Germany.
According to analysis from React-1, most new COVID cases in England were among five- to 12-year-olds and 18- to 24-year-olds who have not yet been immunised.
The research also suggested a strengthening link between cases and hospital admissions.
The UK reported a further 9,055 cases on Wednesday, the highest number of infections since 25 February, adding to concerns about the spread of the Delta variant, which was first detected in India.
It comes as ministers are said to be planning to allow fully vaccinated people to travel to amber-listed countries without having to quarantine on their return ahead of the summer holiday season.
Read more: Travel stocks rally as Britain considers easing restrictions for vaccinated people
The news sent shares in British airways owner IAG (IAG.L) more than 3% higher before retreating at the end of the day, while easyJet (EZJ.L) climbed 2.8%, and Wizz Air (WIZZ.L) and TUI (TUI.L) were 0.8% and 2.4% up, respectively.
Only a handful of destinations are on the UK’s green list, with major destinations in Europe, such as Spain, France and Italy, on the amber list. Around 50 territories are currently on the red list.
Watch: What you need to know about COVID-19 variants
Across the pond, the S&P 500 (^GSPC) was flat and the tech-heavy Nasdaq (^IXIC) gained 0.9% at the time of the European close. The Dow Jones (^DJI) was 0.7% lower.
On Thursday, new data showed that the number of Americans filing fresh claims for jobless support rose to 412,000 last week for the first time since April. Economists were expecting another fall to around 359,000.
This was an increase of 37,000 from the previous week’s 375,000, the lowest since the start of the pandemic, following a six-week run of falling jobless claims. The jump in claims was concentrated in three states – Pennsylvania, California and Kentucky.
Read more: Jobless claims: Initial filings unexpectedly rose to 412,000 last week
It comes as the US Federal Reserve updated its “dot plot” on Wednesday night, showing it has pulled forward its first expected post-pandemic rate rise to 2023 as it looks to prevent overheating in the economy.
The dot plot maps out each member’s expectations for rates over coming years. In March this year it showed the median member expecting no rate hikes through that time horizon. The upward revision suggests that the Fed sees a faster-than-expected recovery.
On Wednesday, the Fed held interest rates at near-zero, and reiterated for now its commitment to its asset purchase programme, which is absorbing about $120bn (£85bn) a month in assets.
“Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain,” the Federal Open Market Committee said in a statement.
Read more: Fed holds rates at near zero, projects two possible rate hikes by end of 2023
The news saw markets end mixed in Asia on Thursday after Wall Street closed lower. In Japan, the Nikkei (^N225) fell 0.9% while the Hang Seng (^HSI) edged 0.1% higher and the Shanghai Composite (000001.SS) rose 0.2% on the day.
“This reaction may serve as a useful reminder that while central banks may seem fairly relaxed about the inflation outlook, they still have to look a lot further out, and realistically if the economy improves as expected, monetary policy will have to change,” said Michael Hewson, chief market analyst at CMC Markets.
“The fact that the Federal Reserve are slowly preparing the ground now may well be unsettling for markets but it is also necessary, and in the here and now, monetary policy still hasn’t changed that much.”
Watch: Fed eyes earlier rate hike as economy heals
