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Federal Reserve chair’s comments and lockdown easing lift stocks

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A large market rally has been fuelled by positive data on death and infection rates in countries which are easing lockdown conditions, helping alleviate some of the concerns over a second wave in the pandemic, says AJ Bell investment director Russ Mould.

“Equities also got boost as US Federal Reserve chair Jerome Powell told US television the Fed ‘wasn’t out of ammunition by a long shot’ despite the massive injections of liquidity into the financial eco-system it has already delivered.

“Asian stocks were higher overnight, brushing off fears over a resumption of trade hostilities between China and the US and the unsurprising news that Japan’s export-driven economy was in recession.

“The resources sector helped power gains in London as commodities rose on hopes for a return to more normal levels of demand – with Brent crude approaching $35 per barrel.

“A key question for the FTSE 100 is whether it can get above the 6,000 mark and stay there. That will almost certainly depend on whether rates of infection remain low as people return to work.

“Budget airline Ryanair was one of the big gainers as its backward-looking full-year results were good and the outlook merely terrible rather than apocalyptic – even if the company grumbled heavily about the state aid given to some of its competitors. International Consolidated Airlines was pulled higher in its slipstream.

“The pound recovered a bit of ground against the US dollar at $1.212 but remains depressed against the US currency and the euro amid deadlock in Brexit trade talks. This issue hasn’t gone away despite the market’s attention being drawn to the coronavirus crisis.”




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