Lockdown exit hopes propel stocks higher

“The markets reacted like a coiled spring on Tuesday as the loosening of lockdown conditions in the UK and rest of the world, as well as progress on another potential vaccine, raised hopes of a recovery for a global economy which has effectively been on life support,” says Russ Mould, Investment Director at AJ Bell.

“Tensions over political unrest in Hong Kong were put to one side as businesses at the sharp end of the crisis had their day in the sun.

“Pubs, cinema owners, airlines, hotel operators and retailers all surged as investors look for consumer demand to return. In this context, a reading of US consumer confidence this afternoon will offer an insight into how shoppers are feeling in the world’s largest economy.

“Also supporting stocks in the UK is Project Birch – with Rishi Sunak apparently authorising a plan to bail out strategically important businesses in the same way as Germany rescued its main airline Lufthansa.

“Whether this relief rally can last will depend on whether the easing of containment measures can be achieved without a second spike in coronavirus infections, and until then further volatility in these sectors cannot be ruled out.

“Another key unknown is the extent to which a period in effective quarantine has affected consumer behaviour. This could take longer to become apparent.

“Reduced supply and signs of returning demand lifted oil prices, with Brent above $36 per barrel. Gold prices were fairly stable, below their recent highs at $1,729 per ounce.”

These articles are for information purposes only and are not a personal recommendation or advice.