UK markets have been largely on the front foot as investors embraced the Government’s first moves to ease the pandemic lockdown and restart business and the economy.

Boris Johnson’s tentative measures will see many people who were unable to work from home and previously furloughed return to their jobs in key industries. This includes construction and some retail including DIY stores and garden centres.

Chancellor Rishi Sunak also extended the UK’s furlough scheme to October. A quarter of the UK workforce, about 7.5m people, are now covered by the scheme, which has cost £14bn a month. Children will also gradually begin returning to the classroom, and advice to avoid public transport and continue social distancing remains in place.

With cycling actively encouraged as a way to get about, investors swarmed round Halfords (HFD), sending the share price soaring nearly 50% since the end of last week. Other big winners so far include grocery delivery firm Ocado (OCDO), virus testing kit developer BATM (BVC) and Kingfisher (KGF), which owns the B&Q DIY chain.

‘Lockdowns are now in the process of being relaxed, both here in the UK and across much of Europe, which is clearly good news, but the relaxations are very tentative, with further easing dependent on there being no secondary spike in infections,’ says Rupert Thompson, chief investment officer at wealth manager Kingswood.

‘The latest news here has been rather less encouraging, with new localised outbreaks of the virus in China, South Korea and Germany.’

For the recent stock market rally to be sustainable ‘much needs to go right given valuations are stretched and the market seems to be assuming a strong rebound in earnings in 2021,’ says Lori Calvasina, head of US equity strategy at RBC Capital Markets.

Confirmation of the damage done to the US labour market, where employment fell by a massive 20.5m in April, is worrying. That’s effectively unwound job growth notched up since the global financial crisis, and the unemployment rate has surged to 14.7%.

The pound continued to ebb and flow against both the dollar and euro this week implying that currency investors are no more informed of the future than anyone else.

Angst over Covid-19 and trade continues to smoulder between the US and China while investors have been warned not to underestimate the investment risks of Brexit negotiations between the UK and EU.

Entering the third round of talks this week, the pandemic has understandably distracted both politicians and trade negotiators, but ‘the clock on trade talks has continued to count down regardless,’ says Matthew Cady, investment strategist at wealth manager Brooks Macdonald, with less than two months left to the 1 July transition deadline.

‘The UK/EU trade talks continues to be one of the key market risks that we are watching, given the potential negative impact for risk assets,’ he adds.

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