The FTSE, like most of the European indexes, is holding up well Wednesday morning, supported by the slow reopening across parts of Europe. However, mixed earnings and political news may make the rest of the day’s trading more unpredictable.
European leaders are scheduled to meet tomorrow to discuss how to help the region’s economic recovery although comments from the Italian Prime Minister indicate that the summit may not lead to a clear financial deal. The finance necessary to turn around European economy will be eyewateringly high, particularly if Italy’s bank UniCredit is correct in its prediction that the region’s GDP will drop 13% this year. The bank took on a €900 million loan loss provision for the first quarter to balance out the impact of the coronavirus.
Despite UniCredit’s comments FTSE-listed banks are trading mostly in the black as investors bank on UK banks bearing much smaller losses because of the high level of government support.
Building materials group CRH is leading the FTSE gainers with a 3% rally after it reported an increase in first quarter sales despite the onset of the pandemic in the UK in mid-March. Equipment rental group Ashtead and ITV are also among the top gainers.
Partial OPEC = no resolution to the glut
Investors waiting for Russia and Saudi Arabia to resolve the current glut in the oil market may have to wait a long time as both of the countries seem to be waiting for somebody else to cut production first. At Tuesday’s conference call of OPEC+ producers Russia and Saudi Arabia were conspicuously absent with only the smaller producers discussing potential cuts. Oil prices have been crashing for two days now and with no support from producers it is hard to see how the trend will turn.