A dulling of recovery hopes as Europe tackles a third wave of coronavirus are a bit of a double-edged sword for the market as they also seem to have cooled the inflation fears which have had investors in a tizz, says AJ Bell investment director Russ Mould.
“Indeed, the rate of UK CPI actually came in well below expectations for February. Oil prices also fell overnight as Asian shares took a step back.
“What markets would really like is a Goldilocks situation where the recovery is neither too hot to avoid causing prices to rise uncontrollably, nor so cold that it prompts another downturn.
“However, this is incredibly difficult for central banks to engineer when they don’t know exactly how this latest phase of the pandemic will play out. For now the emphasis seems to be to risk doing too much rather than doing too little to support the economy.
“Rolls-Royce, buffeted by turbulence over the extension of travel restrictions affecting its aviation sector clients, faced further share price pain on Wednesday after yesterday’s revelation that the Norwegian government is standing in the way of a sale of its maritime engine business to a Russian company.
“Just as the situation with the wider economy it looks like the company’s recovery could be increasingly complicated