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FTSE fights back

by LLB Editor
4th Aug 21 12:05 pm

The FTSE 100 continues to fight back after a sell-off in mid-July, rising another 0.4% to 7,133. If it can break the 7,217 intraday high seen on 16 June, then the index would be trading at levels not seen since February 2020 when global markets started to crash as the pandemic spread.

“Hitting that level looks possible this summer in the absence of any major negative news to trouble investors,” says Russ Mould, investment director at AJ Bell.

“Sadly, it doesn’t take much to rattle the markets, and there are plenty of reasons to remain cautious, such as many stocks trading on elevated valuations and the Delta variant continuing to cause disruption.

“The UK market on Wednesday was driven by BP extending gains for a second day following yesterday’s results. Banks and housebuilders were also in vogue.

“What’s interesting is how demand for certain industries has remained strong post-lockdowns. There was a feeling that some sectors would see a drop-off as life starts to return to normal, but in many cases that hasn’t happened.

“Taylor Wimpey is saying that property demand remains strong despite the stamp duty holiday boost being withdrawn, and Marshall Motor says that people are still rushing to buy cars. There remains a fundamental lack of supply of houses versus demand, which is positive for property prices. Used vehicle prices have shot up over the pandemic and but in this case, it seems inevitable that they will drop back down at some point.”

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