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Taking stock as UK shares hit snooze

by LLB Editor
28th May 21 11:19 am

“K stocks have spent much of the past week trading sideways with a lack of real catalysts to push them firmly in either an upwards or downwards direction and today’s modest move higher for the FTSE 100 is very much in that vein.

“A relatively quiet period for corporate and economic announcements represents a good opportunity to take stock of 2021 so far.

“It has been five months of investors fluctuating between optimism over the recovery, concern over the state of the Covid-19 pandemic and fears the economy will overheat resulting in rampant inflation,” says AJ Bell investment director Russ Mould.

“A key feature has been a recovery in UK assets which, even before Covid struck, had been largely underperforming their main global counterparts since the Brexit vote in 2016.

“The drivers for the renewed interest in UK stocks have been the successful vaccine rollout and accompanying reopening of the economy, and some encouraging noises from the corporate world as firms have updated on their first quarter trading.

“The pound is at its highest level in three years against the dollar at $1.42, while the FTSE 250 and FTSE Small Cap indices, which have more of a domestic focus, have outperformed both the more globally-orientated FTSE 100 and some other major stock markets around the world, notably the technology-heavy Nasdaq index which had previously been on a supercharged run.

“Whether this trend can be sustained may come down to the battle between vaccines and variants and if the UK can stick to a road map which would see nearly all coronavirus restrictions lifted in a little over three weeks’ time.”

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