FTSE 100 futures dip following day of bleak global economic news
We examine what moved markets on Thursday and where FTSE futures are suggesting the markets will open on Friday.
FTSE 100 market moves at a glance
The FTSE 100 had enjoyed an encouraging day on Tuesday, laying the groundwork for the index to surpass the psychologically significant 6000 mark during Wednesday's trading. FTSE 100 futures even flirted with 6200, propelled by oil price rallies and hopeful predictions about the relaxation of lockdown measures.
Yet Thursday's trading was characterised by significant falls. The FTSE 100 ended a difficult day of trading at 5901.21, a 3.5% decrease from Wednesday's close. While FTSE 100 futures soared as high as 6190.8 during Thursday, prices also plummeted as low as 5874.5.
The June FTSE 100 futures contract last traded at 5838 points, suggesting a weaker open on Friday, 1 May.
A day of challenging economic news for UK markets
Thursday proved to a red day for major indices in Europe and the United States, with losses posted across the board. Christine Lagarde, governor of the European Central Bank, revealed today that ECB analysts had updated their Q2 forecasts and projected a 15% quarterly economic decline in the eurozone. Lagarde also painted a grim picture for the entire year, with those analysts anticipating that the eurozone will shrink by anything between 5% and 12%.
The news that 3.84 million Americans lost their jobs last week contributed to a downward trend on Wall Street, with around 30 million having now filed jobless claims during the pandemic in the United States. This rising unemployment is set to pose a significant threat to the American economy.
The day also brought domestic developments that exacerbated the FTSE 100's slide. The troubles of Royal Dutch Shell helped to set the FTSE 100 on a downward trajectory during the morning's trading on Thursday 30 April.
Influenced by a 46% decrease to £2.3bn in first-quarter net income, as well as the severe retraction of global oil demand, Shell executives considered it prudent to cut its dividends. This is the first time that the oil and gas giant has taken such a step since the Second World War.
More worrying news hit the FTSE 100 late in the day of trading, with high-street retailers Oasis and Warehouse announcing their permanent closures - along with the loss of 1,800 jobs. Investors will naturally be wary that other retailers may be forced to take the same measures.
The Prime Minister Boris Johnson resumed daily briefing duties for the first time since his return to work. This 17:00 briefing came too late to affect the FTSE 100 during trading hours, but it will be interesting to see if the index starts Friday morning with renewed vigour following the content of Johnson's briefing.
As mentioned at the start, FTSE futures are currently suggesting a modestly lower open.
Johnson used this briefing to deliver an update on the UK's current position in the fight against the coronavirus spread, stating that the country is now past the peak level of infection. Johnson stated the government's intentions to explore three key areas in the following week: how to restart the economy, how to safely reopen schools, and how to facilitate people's safe travel to work.
Any easing of lockdown measures is expected to shake some FTSE 100 companies out of their current malaise, although Johnson also used the briefing to stress the need to continue social distancing measures in order to further reduce the rate of infection and prevent a second spike of coronavirus infections.
The government's announcement of its plans to reinvigorate the economy will likely have further effects on the FTSE 100 next week.
How to trade the FTSE 100 index – long or short
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For example, to buy (long) or sell (short) the FTSE 100 index, follow these easy steps:
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- Confirm the trade
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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