FTSE 100 and Wall Street push higher on economic recovery hopes
Wall Street pushed higher and the FTSE 100 reversed early loses to post modest gains today as investors were buoyed by optimism about global economic recovery and more US stimulus.
All three major US indices pushed higher, with the tech-heavy Nasdaq rebounding after a steep decline in yesterday’s trading.
As the end of trading neared, the Nasdaq was up almost 3.7 per cent, while the S&P 500 and Dow Jones rose 1.4 per cent and 0.2 per cent respectively.
Electric car firm Tesla drove the index higher, rocketing nearly 20 per cent over the course of the day after a five-day slump.
Amazon and Microsoft also posted their biggest single-day gains in several weeks, pushing the bourse to its best one day performance since 4 November. The tech stars had suffered sharp losses in recent weeks as rising yields raised concerns over their high valuations.
However, US 10-year Treasury note yields slipped back to 1.523 per cent after hovering near 13-month highs yesterday, giving traders fresh incentives to put money into equities.
It came after London’s blue-chip index initially opened lower, before rising 0.50 per cent to 6,752 points by mid-morning. These gains were pared back to level trading by mid-afternoon.
The domestically-focused FTSE 250 had more luck, rising 0.69 per cent by the afternoon.
Oil majors BP and Shell were among the biggest risers on the FTSE 100, building on yesterday’s gains to push higher again today.
However, gains were capped by mining stocks, with BHP, Rio Tinto, Anglo American and Glencore among the biggest fallers.
Bank stocks including HSBC, Barclays and Lloyds were also amongst the worst performers.
“The FTSE 100 made a steady but unspectacular start to trading on Tuesday – likely a relief to investors who have seen some big gains and substantial losses in recent days as levels of panic over rising inflation have ebbed and flowed,” said Russ Mould, investment director at AJ Bell.
“Monday’s significant rally suggested that noises from central bankers aimed at calming fears about spiralling bond yields and rising prices had succeeded in giving investors the comfort blanket they needed to start buying again.”
The modest rise put the brakes on a bullish start to the week for the index, which closed up 1.34 per cent.
Mining and bank stocks had been the biggest drivers behind yesterday’s rally.
But investors were this morning rattled by a stronger pound, while Barclaycard spending data showed a 13.8 per cent drop in consumer spending in February.
“It’s no surprise that the markets have paused this Tuesday, catching their breath after sprinting to the close on Monday,” said Connor Campbell, financial analyst at Spreadex.
“Still back above 6,700 despite slipping 0.2 per cent, the FTSE couldn’t move higher after the bell. It didn’t help that the pound rose 0.2 per cent against the dollar and 0.1 per cent against euro.”