Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

FTSE 100 set to climb on US stimulus hopes, while UK GDP slumps

The FTSE 100 continued its ascent on Wednesday, despite the UK economy sliding into a recession after shrinking 20.4% in the second quarter.

The FTSE 100 closed 2% higher on Wednesday to 6280.12 points, despite the UK economy sliding into a recession after GDP shrank by 20.4% between April – June (Q2) 2020.

The blue-chip index moved higher midweek, with investors choosing to overlook the disappointing economic data coming out of the UK.

Instead, traders appear to remain hopeful of a potential vaccine being developed, with the race heating up among drug makers like AstraZeneca, GlaxoSmithKline, Pfizer and Moderna, as well as other smaller biotech firms.

Investors are also hopeful of US politicians implementing another stimulus package, with US stocks rallying near all-time highs on hopes that Republicans and Democrats will get the bill passed despite weeks in stalemate.

UK enters recession after dismal Q2 figures

The UK economy contracted by a fifth in Q2, compared with the same period a year prior, with the economic fallout of Covid-19 made clear after months of lockdowns that forced many industries come to a complete standstill.

The dip in economic activity in Q2 is the worse on record and follows a 2.2% contraction in the previous quarter. As a result of two consecutive quarters of economic contraction the UK economy has officially entered into a recession.

‘The UK is officially in recession, and the slump in the first six months of the year is worse than most of its peers. However, the monthly data already shows that the worst is behind us for the economy. GDP numbers for June show a strong bounce in activity as the economy emerged from lockdown.

‘We expect pent-up consumer demand to drive a strong recovery in the third quarter, although this momentum will gradually fade as the outlook for the labour market deteriorates,’ Dean Turner, economist at UBS Global Wealth Management said.

‘The UK economy is unlikely to return to its pre-crisis level before the end of next year,’ he added.

Industries that require a high degree of social interaction have been acutely impacted by the various coronavirus restrictions that have been put in place by the UK government.

Unsurprisingly, the services, constructions and production sectors all saw record quarterly falls, according to data compiled by the Office of National Statistics (ONS).

‘The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover,’ ONS Deputy National Statistical for Economic Statistics Jonathan Athow said.

‘Despite this, GDP in June still remains a sixth below its level in February, before the virus struck,’ he added.

UK economy expected to bounce back in Q3

Economists are predicting the UK economy will bounce back in Q3, with British businesses emerging from lockdown and finally able to reopen their doors.

The Bank of England forecast an 18% jump in economic activity in Q3, with the 8.7% bounce the UK economy mustered in June a positive sign for the future. However, it is worth noting that the UK’s economic recovery rests on it avoiding a second wave of coronavirus cases.

The UK government has also announced that its furlough scheme, which subsidises the wages of million of employees that would otherwise be cut due to the economic fallout of Covid-10, will come to an end in October.

FTSE 100 pushes higher

The FTSE 100 index has recovered from its overnight weakness, retreating towards 6120 before resuming its move higher towards 6200, according to Chris Beauchamp, chief market analyst at IG.

‘Above this a new higher high is created, and would mark a further reinforcement of the current bullish view,’ he added. ‘A reversal below 6100 would suggest some more short-term weakness.’

FTSE 100: After-hours trading with IG

IG offers extended hours trading options for the FTSE 100 index and other major indices. Buy long or sell short on the FTSE 100 via CFDs and other instruments provided by IG's market-leading trading solution. Start by opening a live or demo account with IG today.

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. See full non-independent research disclaimer and quarterly summary.

Seize your opportunity

Deal on the world’s stock indices today.

  • Trade on rising or falling markets
  • Get one-point spreads on the FTSE 100
  • Unrivalled 24-hour pricing

See opportunity on an index?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on an index?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from one point on the FTSE 100
  • Trade more 24-hour indices than any other provider
  • Analyse and deal seamlessly on smart, fast charts

See opportunity on an index?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.