FTSE 100 futures set for quiet weekend as investors eye Covid-19 numbers
Sharp increases in Covid-19 cases mean wary investors and a potentially stagnant weekend for the FTSE 100. However, weekend traders may benefit from an impending spike.
A rise in coronavirus cases around the world forced the FTSE 100 to open lower on Friday as investors continue to be spooked by data coming out of Florida, which had just reopened part of its economy again following a state-wide lockdown. On Thursday, the state recorded its largest daily death total yet, while the US recorded over 60,000 cases.
What’s causing the FTSE 100 price stagnation?
With Thursday’s announcement that England is taking a similar approach to the US by opening gyms, salons and other parts of the economy, many investors are wary of the prospect of another lockdown brought on by a future ‘second wave’. As a result, the FTSE 100 is on track for a weekly fall of over 2%.
According to analysts, the FTSE 100 looked like a stopped clock on Friday. Overall, market malaise meant that the blue-chip index barely moved and, by mid-afternoon, it was up only 28 points (0.5%) at 6,077, before eventually closing at 6,095.41 points.
With the number of new coronavirus cases in the UK rising for the first time in eight readings and footfall in retail stores remaining over 50% lower than this time last year, further stagnation is expected for the index over the weekend as investors wait for further data to be released.
How the summer statement could affect spending over the weekend and the FTSE 100 next week
This week’s bearish trend could, however, be overturned if the Chancellor’s pledges in his summer statement create an increase in footfall on the high street over the weekend and into next week.
The flagging hospitality sector, in particular, will be hoping to benefit from the Chancellor’s temporary cut to VAT from 20% down to 5%, which comes into force on 15th July. This VAT cut applies across the hospitality industry and it’s hoped that the move will get Brits spending again. To further encourage spending, the Chancellor has also unveiled a plan to pay employers to keep their furloughed staff through to January - such a safeguard on jobs is likely to boost consumer confidence.
Elsewhere, the immediate cut to stamp duty for 90% of homebuyers should also help to revitalise the faltering housing market. Halifax recently announced that house prices had fallen for four months in a row, but the stamp duty cut should encourage people to move and force prices higher in a stimulated market. Immediately following the announcement, FTSE 100 member Taylor Wimpey saw their share price soar.
As a result, investors should keep an eye on the public's reactions and actions this weekend. This new-found spending power has the potential to give the economy a boost over the weekend and return the high street to something resembling normality.
How to trade the FTSE 100 this weekend
If customer confidence does return and business optimism rises, we could see the recent losses from the FTSE 100 quickly turn into gains. Looking to effect trades relating to the FTSE 100 over the weekend could therefore be a positive move.
IG is the only UK provider to offer weekend trading on key indices like the FTSE 100. These weekend prices are quoted separately to weekday ones, so you can even use these markets to hedge against your weekday positions.
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