FTSE 100 holds steady as Boris Johnson faces backbench fury over lockdown

The FTSE 100 was today set to hold steady even as discontent over Boris Johnson’s extension of Covid lockdowns spread through the Tory ranks.

Reports suggested the Prime Minister was facing a growing backlash from his own MPs against the postponement to reopening the economy to July 19. Even moderates in the party were said to be wavering in their support.

Support from the Labour party means the delay will get through parliament but Conservatives are increasingly talking of revolt, according to some reports.

Signs suggested that the growth of cases may be levelling out, adding to backbenchers’ concerns that the government had paid too much heed to overly cautious scientists.

Shares in some hospitality and travel companies have been badly affected by the extension, which adds to the extreme pain they have been suffering during the pandemic.

Calls have been growing in those quarters for the government to delay tapering off support packages in the coming weeks.

The FTSE 100 was set to trade relatively flat, up 8 points at 7180, according to traders on the IG platform.

That was the view before UK inflation data due out at 7am which is expected to show consumer prices rose 1.8% in the year to May, with core prices up 1.5%.

The big question is whether these increases are long term or just temporary blips related to the turmoil caused in supply chains and other factors caused by the pandemic and Brexit.

Some are concerned it will be permanent due to extremely high factory gate prices. These hit 9.9% in April and are expected to come in at 10.6% in May.

A few weeks ago, such numbers would have triggered a spike in bond yields as markets predicted the Bank of England would be forced to taper off its covid monetary support - near-zero interest rates and QE.

But the narrative has changed as, alongside the US Federal Reserve, the Bank has made clear that it needs further signs of a return to normalisation in the economy before it acts. No change is expected to policy until next year by the financial markets.

Today we get the views of the Fed policymakers in a press conference and rate decision in Washington DC.

Markets expect more of the same message from governor Jay Powell, that perhaps 8 million more people are without jobs in the US than before the pandemic and that inflation pressures are transitory.

Indeed, some bumper job numbers in the US have subsequently been revised downwards and April and May employment data were underwhelming for some.

Undoubtedly though, while job growth may not be in the 1 million a month ballpark many hoped for, the US economy is on a rapid trajectory upwards, suggesting the current blunderbuss approach to assisting the economy with monetary help is beginning to look overly generous.