FTSE 100 futures marginally lower amid Covid-19 second wave fears

FTSE 100 futures are trading slightly lower, suggesting that UK stocks recent recovery is running out of steam amid a myriad of macroeconomic headwinds.

FTSE 100 futures are trading marginally lower on Wednesday, with UK stocks recent recovery showing signs of losing momentum.

The blue-chip index closed 0.17% higher on Wednesday at 6253, with its rally slowing amid fears of a second wave of Covid-19 cases that could see the UK forced to reintroduce strict lockdown measures.

Earlier this week, the FTSE 100 fell below the 6000 points benchmark, with investors pulling out of riskier assets after news emerged that China shutdown a food market in Beijing after a spike of Covid-19 cases.

The news exacerbated fears of a second wave of coronavirus cases emerging globally, which would force governments to reintroduce stricter lockdown measures, plunging the global economy into an even deeper recession.

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FTSE 100 moves upwards after pause

Having rallied sharply on Monday, breaking through short-term trendline resistance, the FTSE 100 then calmed on Tuesday, consolidating around 6200 after a push to 6300 that created a new higher high, according to Chris Beauchamp, chief market analyst at IG.

‘Further gains may see this level broken, which would bring 6400 and then 6500 into view,’ he added. ‘The rebound from Monday’s low reasserted the bullish view here, which remains in place unless we see a drop below 6100 that might suggest a move back to 5950.’

Investors believe stock market is ‘overvalued’

According to a recent survey carried out by Bank of America (BofA), 98% investors said that they think the financial markets are ‘overvalued’ after rebounding from March lows due to global governments stimulus packages to offset the economic impact of the Covid-19 pandemic.

Cash levels at fund managers fell in June to 4.7%, down from 5.7% the month prior, with 93% of investors surveyed admitting they were growing increasingly concerned about the prospect of a prolonged recession.

BofA said in the report that the recent rise in investor optimism remains ‘fragile’ and unlikely to be maintained amid the myriad of macroeconomic headwinds.

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