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FTSE closes higher as UK chancellor announces £4.6bn in business aid

Kumutha Ramanathan
·Contributor
·2 min read
An almost-deserted Bank junction in the heart of the City of London on the first business day of the New Year. (Photo by Luciana Guerra/PA Images via Getty Images)
News of UK business grants in the face of a third national lockdown helped push London's FTSE higher. Photo: Luciana Guerra/PA Images via Getty Images

London’s FTSE 100 (^FTSE) closed higher on Tuesday as UK chancellor Rishi Sunak unveiled £4.6bn ($6.4bn) in grants for firms and workers hit hard by yet another full-scale lockdown across the UK.

The FTSE 100 (^FTSE) closed up 0.4% in London. Its continental peers were in the red, with Germany’s DAX (^GDAXI) down 0.6% in Frankfurt at market close, while the CAC 40 (^FCHI) was also lower 0.7% in Paris.

US markets were in positive territory in mid-day trading.The S&P 500 (^GSPC) gained 0.5%, the Dow (^DJI) was up 0.2% and the Nasdaq (^IXIC) went higher 0.5%.

Further national lockdowns across the UK were announced on Monday. England’s rules will last until at least mid-February, with Scotland’s being reviewed at the end of January. The news comes as the UK reported a record 58,784 cases on Monday, in addition to a further 407 deaths within 28 days of a positive test.

Germany is also extending its lockdown until 31 January.

Watch: Boris Johnson announces third national lockdown in England

“Investors will have to accept that Europe could find itself in lockdown until spring - with perhaps some temporary easing of restrictions in-between,” said Milan Cutkovic, market analyst at Axi. “However, it was clear from the beginning that the vaccination campaign will require time, and will not lead to an abrupt end of the pandemic.”

READ MORE: Music chiefs warn UK summer festivals risk cancellation despite vaccines

European and global investors are also closely watching the US Senate dual runoffs in Georgia, which could impact president-elect Joe Biden’s ability to pass fiscal stimulus programmes. A Democrat win in both races could take control of the Senate away from Republicans, allowing Biden to pass more generous fiscal stimulus packages when he enters office.

Outgoing president Donald Trump’s call to pressure Georgia’s top election official to “find” votes in an effort to overturn his loss to Biden in the state has been unsettling for investors.

Expectations are that the US House and Senate will certify Biden’s election win on Wednesday, but some Republicans are saying they will vote against such a move. In addition, thousands of Trump supporters are expected to protest the event.

Asian markets were largely higher despite the US Senate news weighing on them. While Japan’s Nikkei (^N225) fell 0.4% at market close, the Hong Kong Hang Seng (^HSI) leapt up 0.6% and the Shanghai Composite (000001.SS) also gained 0.7% at market close. South Korea’s KOSPI (^KS11) headed higher 1.6%.

Watch: Georgia holds key to Biden's power