Covid treatment update lifts market mood

Trading has kicked off the new week on the front foot thanks to vaccine optimism after the FDA approved the use of blood plasma from recovered patients as a COVID treatment option for coronavirus patients in hospital. Whilst this is by no means that big coronavirus cure that the world is waiting for it is most certainly another step in the right direction. 

Adding to the upbeat mood, Trump is considering by passing normal US regulation to fast track the British vaccine candidate by Oxford University and AstraZeneca for use in the US prior to the US Presidential elections. A vaccine ahead of the US Presidential elections would almost certainly give Trump’s campaign and popularity a huge, much needed boost and comes as the Republican convention takes place this week. Timing is everything. 

Today the economic calendar is light meaning that investors will be vulnerable to risk sentiment and coronavirus statistics. As the week progresses German GDP data and US GDP figures will be in focus ahead of the virtual annual Jackson Hole symposium which start of Thursday. Here investors will be listening closely for clues as to where the Federal Reserve intends to take monetary policy. 

Whilst recent US business activity and home sales data has boosted sentiment, there is a growing expectation that more monetary policy is needed to keep the economic recovery on track. 

Europe 2nd wave fears to cap gains

Whilst vaccine chatter is boosting sentiment, alarm over rising coronavirus cases in Europe are expected to keep gains in check. France recorded over 4000 new daily cases on Sunday, its largest one day jump since mid-April. Spain has also seen an eye-catching rise in Covid cases with 8000 new infections being reported on Friday.  The rise in infections in Europe come as people travel for a vacation and attend summer gatherings.  

Bunzl reinstates dividend 

On the corporate calendar Bunzl announced that it will resume its dividend after reporting a solid 16.6% rise in first half profits. Bunzl’s diversified product offering, and broad geographic base means the firm is performing well in challenging circumstances, whilst Bunzl’s defensive qualities are attracting investors. The share price has risen 90% from March lows and are trading over 15% higher YTD. However, the second half is expected to be tougher with a more muted outlook expected from UBS analysts. 

FTSE Chart 

The FTSE has jumped 1% higher in early trade, pushing through 50 sma on 4 hour chart. The FTSE looks to target 100 sma at 6102 and 200 sma at 6125. A move above these levels could see more bulls jump in.  

Immediate support can be seen at 5950 (low 21st Aug).