While the situation was mixed elsewhere, the FTSE attempted a strong start for the third session in a row on Wednesday.
With Saudi Arabia agreeing to a cut in output, oil was able to strike an 11-month high, prompting some rather larger gains for BP (LON:BP), up 4.4%, and Shell (LON:RDSa), rising 2.5%. And when those giants are in a good mood it tends to bode well for the FTSE – the UK index rose close to 1%, returning to the 10-month peak it fell from on Monday following the announcement of Lockdown 3.0.
It seems that investors have fully moved past Boris Johnson’s latest restrictions, even if they are the most severe since the initial lockdown in March 2020. Overfamiliarity tends to breed apathy in the markets, and that is just as true of covid-19 headlines – which are more alarming now than they have been at any point in the pandemic – as it is of lockdowns. That and it appears the pull of the New Year’s vaccine hopes are stronger than any concerns over the economic impact of these fresh measures.
Playing its part in the FTSE’s early gains – and the less muscular movements posted by the DAX and CAC, which rose 0.2% and 0.4% respectively – were the Senate election results coming out of Georgia.
Victory has already been called for Democrat Raphael Warnock over Republican Kelly Loeffler, while in the other race Jon Ossoff currently leads – if only by a few thousand votes – against the incumbent David Perdue, with the needle increasingly moving in his favour.
In theory, this is the ideal outcome for investors. A Democrat-controlled Senate would be able to produce a far more substantial stimulus package than, for example, the bill agreed before Christmas, which came in at less than half of the initial proposal passed by the House of Representatives.
Which makes it surprising that the Dow Jones futures are currently looking so limp, with the index heading for a 0.1% dip after the bell, instead of the expected Democrat-bounce.
Potentially keeping the Dow in check is the latest flare-up in US-China relations, a bone Donald Trump is unwilling to let go of despite his dying days in office. The soon not-to-be President has signed an executive order banning transactions with 8 Chinese apps – the latest move in what has been one of the headline features of his administration, and the reigning foreign policy of the last 4 years.
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