The prospect of a gradual reopening of the UK has helped drive FTSE 100 outperformance. Meanwhile questions around the AstraZeneca vaccination could limit uptake amongst the younger demographic.

  • European markets on the rise, with GBP weakness driving FTSE 100 outperformance.

  • Will vaccine concerns stifle efforts to protect younger age groups?

  • Reopening plans boost domestic names once again.

European markets are enjoying a largely positive start to the day, with the FTSE 100 once again leading the pack thanks to a second day of sterling underperformance. Despite a remarkably consistent recovery for the pound over the past year, we have seen some of that optimism unravel this week. Nevertheless, looking at the latest IMF growth forecasts, the impressive 0.8% upward revision for 2021 growth highlights how the vaccination efforts led by the UK government should have a tangible effect on economic performance. Meanwhile, the IMF provided a minimal 0.2% upward revision for the euro area, highlighting the detrimental impact of their stuttering vaccination programme. However, with Oxford pausing vaccine trials on children thanks to links with blood clots, we are seeing some concerns arise over the potential impact it could have upon adoption in the lower age groups. While there have been just 7 deaths in 18 million patients, the risk is that those with less change of dying from covid will refuse the vaccine which could ultimately drive up cases once more.

The prospect of an impending loosening of Covid restrictions has helped boost high-street and services sectors stocks such as Hammerson, Mitchells & Butlers and Restaurant Group, with optimism over the impending economic boost helping to drive stocks higher. Questions remain over whether such loosening will ultimately drive us Covid cases, but until we see a change of the current trajectory, markets are increasingly confident that the UK vaccination effort will help enable a substantial economic recovery in the coming months.

Ahead of the open we expect the Dow Jones to open 29 points higher, at 33,459.

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