The latest from London: FTSE struggles over Delta variant concerns

UK markets had a tough day yesterday, with travel stocks struggling over concerns about the spread of the Delta variant and the return of restrictions in many countries. New data from the Office for National Statistics (ONS) also came yesterday showing inflation in the United Kingdom jumped 2.5% year-on-year in June, the highest since August 2018. This led by fuel, food, clothing and restaurants - sectors that all benefitted from easing Covid-19 restrictions in the UK. Despite this, and the surge in US inflation, bond markets remained calm, while in equities, cyclical sectors somehow outperformed defensive stocks.

Today, the FTSE 100 is down again, hampered by weak oil prices and their effect on energy stocks, with investors still assessing yesterday’s news. Among stocks, Avast jumped by more than 15% after it confirmed rumours that NortonLifeLock is interested in purchasing the British cybersecurity firm.

Jefferies sees “numerous reasons to acquire Avast (additional scale in freemium, larger resulting market share, geographically diversified business)”, but said that “reasons for Avast selling itself are less obvious, beyond the company's stock underperforming YTD and few near-term catalysts”.

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Things to read:

China warns of economic uncertainty despite moderate recovery in Q2 (Financial Times)

U.K.’s MI5 Cites Growing Threats From Russia, China, Iran—and Right-Wing Extremists (WSJ)

Transatlantic inflation surge fuels economists’ fears of overheating (Financial Times)