The FTSE headed higher after the bank holiday, despite fears of a third wave. Photo: Thomas Krych/SOPA Images/Sipa USA
European markets opened higher following the late May bank holiday weekend, as investors parsed the news that the UK could be in the early stages of a third wave of COVID infections.
Prof Ravi Gupta, from the University of Cambridge, warned on Tuesday that the Indian variant of the virus had fuelled “exponential growth”, although caseloads in the UK are still relatively low.
“Of course the numbers of cases are relatively low at the moment – all waves start with low numbers of cases that grumble in the background and then become explosive, so the key here is that what we are seeing here is the signs of an early wave,” he told BBC Radio 4’s Today Programme.
Gupta is one of a growing collection of voices advising that the 21 June easing date for lockdown restrictions should be pushed back.
The UK government has always said that the easing of lockdown would be guided by “data not dates”.
The FTSE 100 (^FTSE) moved 0.4% higher at the open. France’s CAC (^FCHI) was also up 0.4%, while Germany’s DAX (^GDAXI) headed 0.7% north.
The DAX had closed 0.6% lower on Monday as the country’s rate of inflation hit its highest levels since 2018. It rose to 2.4% in May, largely due to an increase in energy prices.
The market will be watching EU inflation and unemployment data for signs of economic health, which are due to be published later this morning.
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US stock futures were making muted moves at the open in London. Futures for major indexes S&P 500 (ES=F), Dow (YM=F) and the Nasdaq (NQ=F) look like they will open 0.2% higher later on.
“Despite all inflation concerns, investors are still happy to support riskier assets, but this view isn’t shared by most of them as they continue to wait for another major catalyst that is likely to set the tone for markets,” said Naeem Aslam, chief market analyst at AvaTrade. “This was one of the major reasons that we have not seen any decent trading volume during the last month.”
Overnight, equities in Asia were mixed. Japan’s Nikkei (^N225) finished the day 0.2% lower.
Meanwhile, Hong Kong’s Hang Seng (^HSI) traded up 0.6% and the SSE Composite Index (000001.SS) was up 0.1%.
On Monday, Japan reported weaker-than-expected growth in factory output and Chinese manufacturing growth was flat.
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