Written by Kunal Sawhney, Kalkine Media
UK shares bounced back sharply with the FTSE 100 rising a little more than 1%, comfortably reclaiming the psychological level of 7,000 ahead of the US Federal Reserve’s interest rate decision. The Federal Open Market Committee will be unveiling its economic projections for the near term, alongside any tapering decision on its bond buying programme.
Investors are quite skeptical about a potential tapering decision, at a time when the businesses continue to struggle with the ever-expanding hardships of pandemic, mutated strains of virus, persistently high rate of hospitalisation, and the unemployment levels remaining higher as compared to the pre-Covid era.
Following Monday’s market mayhem, the benchmark FTSE 100 has already added over 1%, effectively paring all the losses. Meanwhile, the Bank of England is underway with its third-last MPC meeting for the present calendar year.
Extending the gains, the shares of banks, miners and oil & gas corporations continued to provide positive points to the index with the heavyweight HSBC Holdings and BP leading the charge, while the pharma majors AstraZeneca and GlaxoSmithKline partly offset the rise.
The outcome of the meeting will certainly help the investors to rejig their trade setups accordingly before the commencement of the third quarter earnings season. The soon-to-be-announced results during the October-December period will highlight and reflect the material benefits of easements and relaxed social distancing norms.
On the other hand, the results of some corporations will indicate the consequences of raw material shortages, inadequate supply of goods at retail stores, staff shortages, challenges due to supply chain crisis and prospective impact of higher hospitalisations.
Between the July-September stretch, the businesses have been able to resume their respective operations on the widest scale for the first time in the pandemic era.