The partial easing of COVID-19 restrictions in the UK failed to help the FTSE 100 reclaim any ground on the S&P 500. Even so, despite the recent surge in the yields of 10-year government bonds, the FTSE 100 hit a fresh post-pandemic high last week. And the more domestic-orientated FTSE 250 index has risen by 7.9% since the start of the year, regaining its pre-pandemic level. All in all, the composition of UK equities mean they should especially benefit from the economic recovery, according to strategists at Capital Economics.
Rapid economic recovery to support UK equities
“Despite their slower rebound in Q1, the lifting of the COVID-19 restrictions, the composition of the FTSE 100 and favourable valuations means there is scope for UK equities to outperform their global rivals in the second half of the year.”
“Materials, energy, financial and consumer-facing sectors have continued to be among the best-performing sectors in the FTSE All-Share Index since the vaccine news on 9th November 2020. And the index will be buoyed by its larger weightings towards these sectors which we expect to fare best as the recovery gathers pace.”
“UK equities are still trading at cheaper valuations than in the US. Overall, we expect the FTSE 100 to rise from 6,915 currently to 7,500 by the end of 2021 and to 8,250 by the end of 2022.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.