The FTSE 100 closed higher on Monday following a mixed session amid investor fears over a second round of coronavirus lockdowns, with global Covid-19 cases exceeding 10 million.
The blue-chip index fell sharply in morning trading before flipping positive, and rebounded to gain 1.08 per cent by the close.
The FTSE’s European peers also edged into the green, while US stocks traded higher following a selloff last week as investors weighed hopes of more stimulus and improving economic data against a resurgence in global infections.
The smaller, more domestically-focused FTSE 250 added 0.5 per cent.
The FTSE 100’s shaky performance comes as global coronavirus cases passed 10m, according to research from Johns Hopkins University. An estimate by Reuters suggests that global Covid deaths have passed 500,000.
“With Covid-19 filling the airwaves, investors have been uncomfortable chasing the market higher, and with the central banks fully priced in, they will be quick to take profit on upticks,” said Stephen Innes, markets strategist at Axicorp.
US stocks open in positive territory
Wall Street started the week firmly in the green, with the benchmark S&P 500 adding 1.04 per cent by 4.45pm UK time.
The Dow rose 1.75 per cent, while the tech-heavy Nasdaq climbed 0.71 per cent.
“There’s a huge question mark hanging over the stock market recovery, with investors seemingly not currently pricing in the prospect of restrictions could be re-imposed across the globe,” said Oanda senior market analyst Craig Erlam.
“We’re not exactly seeing markets come under any significant pressure but the momentum that carried it for much of the second quarter has clearly waned,” he continued.
“Vulnerabilities are starting to appear, possibly hinting at an end of summer correction as the economic reality doesn’t catch up fast enough.”
BP climbs following Ineos deal
Among individual stocks on the FTSE 100, BP rose as much as 3.81 per cent following the announcement the oil major would sell its petrochemicals business to Ineos for $5bn (£4bn).
UK stocks have staged a strong rebound in the past three months following a coronavirus-driven collapse in March, and are on track for one of their best quarters since the global financial crisis, boosted in part by historic global stimulus.
But the pace of gains has slowed this month, with the FTSE 100 still about 20 per cent off its record high from January, as economic data highlights the extent of the economic damage from a nationwide lockdown imposed to contain the disease.
US coronavirus cases climb
Coronavirus cases are suring in a handful of Southern and Western US states that pushed to re-open early, including Florida, where infections rose 6.4 per cent on Sunday.
“Virus outbreaks in the US continue to weigh on the mood, as it suggests the run-up in stocks on hopes of a V-shaped economic recovery may be overly optimistic,” said CMC Markets’ Neil Wilson.
“The dangers of reopening too quickly seem all too apparent, but investors are also keeping an eye on outbreaks in Tokyo, Australia and China,” he continued.
FTSE 100’s European peers mixed
The FTSE 100’s European peers also faltered on Monday, but were mostly in the green by mid-afternoon. France’s CAC 40 had climbed 1.03 per cent by 4.30pm UK time, while Germany’s Dax added 1.41 per cent.
Asain shares also fell on Monday amid fears over the continued spread of Covid-19. MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.2 per cent, edging further away from a four-month high it hit last week.
Japan’s Nikkei shed 2.3 per cent, while Hong Kong’s Hang Seng dropped 1.33 per cent and the Shanghai Composite lost 0.61 per cent.
“The increase in US Covid-19 infection rates has dented momentum across markets despite the improvements in the global economy, which continues to beat most data expectations,” wrote JP Morgan analysts.
In commodity markets, gold edged nearer its highest since early 2012 at $1,771 an ounce.
Oil prices slipped amid concerns the coronavirus pandemic would slow the reopening of some economies, hitting demand for fuel.