The FTSE 100 is on the back foot despite early gains, with hopes of an economic rebound being dented by ongoing fears of a second surge in Covid-19 cases. easyJet has moved to drastically cut costs, highlighting the difficulties many airlines will be having as air travel remains depressed. Gold has surged into fresh seven-year high as traders look for non-fiat assets.
- FTSE 100 stumbles, despite signs of wider economic improvement
- easyJet cost cutting highlights pressure despite expected surge in July travel
- Gold hits fresh seven-year high
Early FTSE 100 gains have floundered once again, as the selling pressure comes back into play despite intermittent periods of optimism. The recent infatuation on US Coronavirus cases growth appears to have lessened somewhat since the actions taken throughout Florida and Texas to mitigate the spread of the virus. While further regional lockdowns appear likely, there is a feeling that such localised action will slow but not stop the global economic recovery. In a week packed full of economic data, the Chinese economic recovery provides a framework for European nations to follow. In particular, the outperformance in Chinese manufacturing seen in June provides hope for a service-led economy such as the UK, with lockdowns providing huge suffering in the sector throughout recent months.
easyJet shares may be little changed today, but it has been anything but an ordinary day for the travel company. Cost-cutting measures announced by the firm could see 727 pilot redundancies and an exit from their Stansted, Southend and Newcastle locations. With many expecting to see a surge in European travel in July, today’s news highlights the fact that air travel will likely remain hugely depressed by historical standards. While efforts to streamline the balance sheet have typically been treated with optimism throughout this crisis, today’s announcement failed to bolster sentiment given how dramatic their actions are perceived to be. While investors have largely seen this crisis as a temporary hurdle to navigate, the long-term implications of today’s announcement highlights the fact that many airlines will have a considerably smaller footprint for years to come.
Gold has hit a fresh seven-year high today, as traders attempt to commit their funds to assets which help them avoid the likely bumps in the road that lie ahead. Looking back at our post-2007 experience, gold has shown itself to be a major outperformer at times of crisis and monetary expansion. With governments and central banks alike pushing the throttle to the max, it comes as no surprise to see many jump for cover in non-fiat assets such as gold.
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