As the UK’s Prime Minister Boris Johnson returns to work at 10 Downing Street, the FTSE 100 has begun what is expected to be a busy trading week on steady footing.
The markets have been spurred on by the Japanese bond bailout announcement which also serves to lift the main Asian markets, with the Nikkei 225 index having gained 1.5% on Monday morning (27th April). China’s main markets followed suit soon afterwards.
In addition to the good news from Japan, sentiment was further bolstered by scientific data which suggests that much of Europe (including the UK) is past the peak of the coronavirus pandemic.
An End To Lockdown?
Speculation has abounded in the UK press that Boris Johnson may announce plans to modify the current lockdown protocols.
While this won’t mean a complete lifting of quarantine measures by any stretch of the imagination, it could mean that certain businesses will be allowed to begin trading once again – and such a boost to the economy is bound to have a positive effect on the FTSE.
The hope for many traders is that even a partial return to regular economic activity will help to draw a line under the financial carnage of recent months.
As a result, markets such as equities are expected to outperform in the following weeks.
Oil Still Struggling
However, the oil market continues to face the strain. A continued high supply of crude oil with lower demand than usual has meant that West Texas Intermediate is sitting at approximately US$15.50 per barrel.
In the UK, major oil companies BP and Shell are still expected to announce they will maintain generous dividend payouts, even in the face of radically low crude oil prices.
Both companies were responsible for just under 25% of the £75 billion in dividends paid out by FTSE 100 companies in 2019, and will no doubt feel under scrutiny at the moment.
Analysts estimate that just 20 FTSE companies are expected to return approximately £54 billion in dividends in 2020.
The figure expected from the largest listed companies on the exchange was previously £63 billion, which highlights the impact of the coronavirus pandemic on the biggest firms in the UK.