Stock markets cautious ahead of UK Covid lockdown exit plan – business live | Business

As expected it’s a drab start for European equities: the FTSE 100 has lost 0.6%.

The Stoxx 50 index tracking Europe’s largest stocks is down 0.2%, while US equity futures – looking ahead to this afternoon – have also dipped.

Good morning, and welcome to our live coverage of economics, business and financial markets.

Stock markets have surged during the past year as central banks and governments have pumped in stimulus. Now thoughts are turning to whether that rally can continue, as hints of inflation suggest that central banks may be tempted to tap the brakes.

Futures indicate that the FTSE 100 is likely to endure a bumpy start to the week ahead of Prime Minister Boris Johnson announcing more details of the plans to ease restrictions on the UK economy.

The FTSE 100 was expected to follow in the footsteps for the most part of Asian markets outside Japan. The Shanghai stock exchange composite lost 1.5%, while the 300 biggest stocks across both Shanghai and Shenzhen lost 3.4%. Shares were also down in Hong Kong and Korea.

IG Group, an investment platform, explained in its morning note:

Chief amongst the current concerns appears to be the rise in Treasury yields, with a recent resurgence in fixed income returns providing less reason to believe that equities are the only area to invest. […] With commodities on the rise, we have yet another reminder of the potential rise in inflation that many believe could bring an earlier end to the current loose monetary policy environment.

It’s a complicated picture, particularly as the vaccination effort suggests divergences between countries will rise in the short term. A case in point: in the UK the pound has set a new three-year high mark against the US dollar on Monday morning: one pound was worth $1.4051, before it retreated slightly.

Sterling hit the $1.40 mark for the first time in three years on Friday. It is one of the best-performing major global currencies this year in part because of the removal of Brexit risks and also because of the UK’s rapid pace of vaccinations, analysts have said.

Some economists believe the fast pace of vaccinations – 17.6m adults have had a first dose up to 20 February, almost a third of the total expected – could help the UK economy to recover faster than some others.

And we have more to come this morning on:

• Boeing, which has suffered issues with its 777 planes, the latest blow even as its 737 Max gets back in the air.
• British Airways, which has delayed pension payments of £450m so that it can conserve cash until the airline business is able to restart properly.
• Mitchells & Butlers, which reported a big slump in sales – hardly unexpected as its pubs and restaurants closed.

The agenda

• 9am GMT: Germany Ifo business climate index (February; previous: 90.1; consensus: 90.5)
• 1:30pm GMT: US Chicago Fed national activity index (January; prev.: 0.52)
• 2:30pm GMT: European Central Bank’s Christine Lagarde speech