The FTSE-100 fell back today as traders digested yesterday's official data showing the UK entered the steepest recession in history.
London shares were set to drag the FTSE down 72.94 points to 6207.23 in early trading - a bigger fall than the one forecast in pre-market trading.
GDP data yesterday showed the UK economy suffering the sharpest decline of all major countries with analysts blaming the fact that the UK delayed going into lockdown for longer than others, and subsequently exiting it later. This delay has meant several sectors are still locked down here, as was highlighted by yesterday's angry letter to the Government from the nightclubs industry, which remains shuttered, alongside bowling alleys and casinos. It has also possibly resulted in a greater fear factor among British consumers about returning to normal behaviour - shopping, going out and returning to their offices.
All that makes for massive pressure on Rishi Sunak, the chancellor, as he mulls over his fiscal plans for the country.
However, our delayed reaction could also result in the UK bouncing back far more strongly than other nations, which is why the markets did not fall after yesterday's awful number. Also, the figure was broadly as traders had expected.
In fact, shares had a strong session yesterday, with the FTSE-100 climbing to a three-week high at nearly 6300.
Today will see some profit taking from those exuberant levels but there are plenty of big fund managers who take the view that the markets are still not overvalued. With interest rates so low and returns on other assets near zero, there are few other investments that give you as good a chance of making returns. Particularly dividend paying stocks which are, in some cases such as M&G and Legal & General, still offering healthy yields.
Having said that, there has been a surprising improvement in bond yields recently, possibly amid some hints of inflation returning to the US after years of fiscal and monetary stimulus. Today should see an update on prices in Germany, and there have been suggestions of price pressures in the UK, although it is still early days.
Gold has also been showing big increases in value, although some of the steam has been coming out of the yellow metal in recent sessions.
Much of yesterday's strong trading in Europe was due to healthy gains in the US markets, where the S&P 500 came close to setting new record highs.
A deal in the US on stimulus for regions hit hardest by the Covid pandemic is still held up in wrangling between Republicans and Democrats but for now investors seem happy to set that to one side.
More reasons to focus on this afternoon's US jobs numbers.