Are we in the calm before the next storm? Equity markets were very quiet on Tuesday with little large cap corporate news to drive trading volumes and investors sitting patiently for updates on the rate of Covid infections, the vaccine roll-out and EU/UK trade talks,” says Russ Mould, investment director at AJ Bell.
“Under normal circumstances, this should be boom time for retailers and a period for festive joy as people enjoy work parties and finish up those last tasks in the office before taking time off to spend with family and friends.
“Sadly, record redundancy levels in the UK have cast a black cloud pre-Christmas and the onset of London going into tier 3 also weakens sentiment towards the pace of economic recovery.
“There are growing fears that January could be a truly miserable time with businesses taking stock of disruption to trading pre-Christmas and with growing realisation that the vaccine could take longer than expected to be rolled out.
“Investors have been very optimistic in the past few months and there is a sense we could get a bit of a jolt on the markets if it looks like the pandemic is not going to be brought until control in the near future.
“On the UK market on Tuesday, the FTSE 100 dipped 0.2% to 6,519 with a strong showing from the oil producers failing to fully offset weakness in healthcare, utilities and banking.
“In Europe, clothing retailer H&M reported a tough fourth quarter as the second wave of coronavirus impacted sales. Its shares dipped 1.1%. It was a similar message from fellow retailer Inditex, owner of Zara, but its shares nudged up 0.3% after its results met market expectations.”