The FTSE 100 was set to make cautious gains today as England’s hospitality industry was set to reopen trading indoors for the first time in months.
After a rocky time the previous week, the futures market was indicating the FTSE 100 would open 10 points up at 7055 before the opening.
Traders will be closely watching consumer behaviour over the coming days to judge if leisure stocks will benefit fully from the relaxation of Covid social distancing rules or whether people will be reluctant to visit pubs and restaurants after so many months at home.
Early indications suggest a boom in sales should greet the new rules, with many venues reporting being booked out for weeks.
But, with widespread reporting of scientists’ concerns about the decision fully to open pubs in particular, many people may decide to stay away.
The Indian variant continues to be a major concern and the daily tide of statistics will have the power to skew markets as investors remain on guard for the government changing tack on the reopening of the economy.
Key to sentiment more broadly this week, as in previous sessions, will be the outlook for inflation both here and in the US and EU.
Concerns of price rises in the US were the cause of last week’s volatility and seem unlikely to disperse any time soon. Last week saw initial fears stabilise on Thursday and Friday, particularly after weak retail sales data from the US on Friday.
However, sentiment is fickle at these high valuations for shares and any increase in US and UK bond yields - the key predictor for interest rates - will have an outsized impact on the FTSE.
This morning saw China release retail sales and industrial production data which showed retail sales slowed from an increase of 34.2% in March to 17.7% in April. Those figures may look strong, but not so much when you remember they compare to the last year’s deeply negative post lockdown numbers in the country.
It was a similar picture for industrial production, which was up 9.8%.
Later today we hear from a number of Bank of England interest rate setters including the outgoing chief economist Andy Haldane, who will doubtless expound on their views of the reopening’s impact on the economy.
Federal Reserve chairman Richard Clarida is expected to speak as well.
CMC Markets traders are calling Germany’s Dax index flat at 15416 and France’s CAC 40 up 9 at 6394.