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FTSE 100 closes lower as gold surges

FTSE-100

Britain’s premier benchmark index finished down around half a percent, or 33 points, at 6,156

FTSE 100 index closed lower midweek as the gold price surged and traders continued to fret over the repercussions of the pandemic.

UK chancellor Rishi Sunak also today unveiled a new package of stimulus measures to help boost economic activity.

Britain’s premier benchmark index finished down around half a percent, or 33 points, at 6,156.

FTSE 250 fared no better, closing down over 163 points at 17,186.

Equity markets in Europe are in the red as concerns relating to the pandemic continue to weigh on sentiment. Volatility has been low as the health crisis has been bubbling away in the background. The health situation in the US seems to have a bigger impact on European stocks than it does across the pond, noted David Madden, analyst at CMC Markets.

Meanwhile, Sunak unveiled stimulus measures, adding up to £30 billion, including a £2bn kick start scheme for jobs, a 6-month cut in VAT for the hospitality sector, 50% discounts in August at participating restaurants Monday to Wednesday, and a stamp duty holiday for the housing sector.

Currency markets and bond markets appeared unperturbed with the size of today’s fiscal policy response, and it’s not hard to understand why given that every single government around the world is facing similarly huge challenges in keeping their economies afloat, said Michael Hewson, also at CMC Markets.

Whether the measures work or not appears to be neither here nor there for the moment. The simple reality is that we don’t really know what effect these measures will have, or whether there will be a second wave, which could complicate the picture further, he added.

On Wall Street, trade was muted. The Dow Jones Industrial Average added around four points, while the S&P 500 added three. Safe-haven asset gold glistened over 0.62% to US$1,820.80 an ounce.

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