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U.K. stocks tracked gains for global equities on Friday, but were held back a little by a strong pound as investors awaited a coronavirus stimulus package due to be announced by the government.
The Bank of England was back at it on Friday, suspending 2020 stress tests for the eight major U.K. banks and building societies, a day after cutting interest rates for the second time in a week. The BoE and European Central Bank have announced expanded asset-buying programs this week as well, as global financial authorities have been pouring on the firepower against the worsening coronavirus pandemic.
The FTSE 100 index UKX, +1.05% rose around 1.1% to 5212.86, in a week that was poised to lose around 2% overall. The pound GBPUSD, +2.1942% surged 3.4% to $1.1877, but has lost 3.2% this week, partly due to dollar strength as that currency has been the asset of choice for panicky investors amid intense market volatility in recent days.
The Bank of England suspended 2020 stress tests for the eight major U.K. banks and building societies, a day after cutting interest rates for the second time in a week. The BoE and European Central Bank have announced expanded asset-buying programs this week as well.
The chancellor Rishi Sunak is expected to announce an employment and wage subsidy rescue package later on Friday, in a bid to protect millions of jobs under threat from the coronavirus pandemic.
“Pound and FTSE alike are still waiting for Rishi Sunak’s latest address, one that is expected to see a wave of new measures announced aimed at mitigating the coronavirus crisis impact on businesses, wages and growth. Given the markets’ inconsistent relationship with government and central bank interventions, it’s not a guarantee that Sunak’s appearance will preserve Friday’s rebound,” said Connor Campbell, financial analyst at SpreadEx, in a note to clients.
Oil prices swung between gains and losses, last off nearly 6%, but shares of Royal Dutch Shell Group RDS.A, +5.37% RDSA, +5.06% rose 6%, on the heels of a near 24% rebound for prices on Thursday, after a nearly equal loss Wednesday.
Financial stocks were up after the Bank of England’s move, with Barclays BARC, +6.46% BCS, +6.62% up 6% and Prudential PRU, +6.69% gaining over 7%.
