FTSE 100 to fall as Donald Trump sparks confusion with contradictory tweets on Covid-19 bailouts
The FTSE-100 was set to fall today after Donald Trump triggered confusion overnight by first calling for talks on a multi-trillion dollar coronavirus stimulus package to be mothballed until after the Elections, then urging additional economic relief for afflicted businesses and households.
Markets have been on tenterhooks for more than two months over a US Covid-19 stimulus deal aimed at aiding the recovery of big sectors of the economy and boost spending. But Republicans and Democrats remain poles apart on how much money should go into the pot. Every time the news on the talks seesaws towards Deal or No Deal, the markets rise or fall accordingly.
Last night, as he resumed his work schedule after his release from hospital, the President said he had instructed his team to pause the negotiations.
Wall Street shares plunged, but then, in a late night tweet, Trump appeared t o change tack dramatically, saying he was "ready to sign right now" a Bill to offer aid to afflicted businesses and households.
By that time, Wall Street had already closed, with the S&P 500 off nearly 1.5%, but Asian stocks were able to trade on the new Trump stance, recovering earlier losses and setting the session up for London and other European markets on a less negative note.
CMC Markets forecast the FTSE-100 to fall 12 points to 5937 as investors try to figure out what the President is planning. The Dax 30 in Germany was set to fall 32 at 12,874 and the Cac 40 in France, 20 at 4,876.
Traders noted that the decision to mothball the stimulus talks was itself a U-turn, as the President had recently called on Republicans and Democrats to come together and agree a deal.
Back in the UK, investors are still trying to grapple with the UK government's hardened stance against offering significant further stimulus to get businesses through the coronavirus crisis as the pandemic looks set to be a long haul. Prime Minister Boris Johnson, speaking largely to his own back benchers concerned about the cost of all the bailouts, sounded hawkish on the issue at the Conservative conference yesterday.
Meanwhile, markets continue to be looking at Brexit. The pound gained yesterday on hopes of a trade deal amid reports much progress has been made in recent days of UK-EU negotiations.
Oil rallied hard for a second day, winning back losses sustained last week, so shares in BP and Shell will be in focus in today's session.
Markets will also be keenly listening to Tesco's new chief executive Ken Murphy as he delivers his first set of profits at the group - half-year figures for the volatile Covid period.
Halifax house price data later in the morning could move shares in housebuilders as it is expected to show a dip in price rises from 1.6% in August to around 1.5% in September.
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