Wall Street opens higher while the FTSE 250 closes at a new record
Wall Street’s main indexes opened higher today, kicking off a week packed with major economic data that will shed more light on the path of inflation.
The Dow Jones Industrial Average rose 0.9 per cent at the open, while the Nasdaq Composite gained 0.6 per cent.
The S&P 500 added 0.7 per cent as it continued to rally after rising to within 0.6 per cent of its record high on Friday.
Investors are now awaiting key manufacturing and services sector PMIs later in the week to judge the pace of an economic reopening, as well as the main event of US payrolls due on Friday.
“For now, investors are embracing the economic data that shows improvements in the economy and are ignoring data that suggests that it’s going to lead to much higher prices and shortages that affect specific companies,” said Rick Meckler, partner at Cherry Lane Investments.
“The main driver behind the stock market is the reopening of the country…that’s motivating investors to feel a sense of optimism about markets and cause them to come back in and buy stocks with the idea that things will be better by the fall and earnings will improve.”
London markets
London’s main markets pared some gains but still stayed well into positive territory today as heavyweight commodity stocks lifted the index and the pound climbed to a three-year high.
The blue-chip index closed 0.8 per cent higher to 7,080 points, with base metal miners gaining 3.1 per cent as they tracked higher copper and iron prices.
Oil majors BP and Royal Dutch Shell added more than 1.2 per cent each after Brent crude topped $70-mark on favourable demand outlook.
“UK markets has been the big beneficiary of inflation trade since it is a heavily weighted market with the commodity sector. At the same time, it’s underperforming when compared to the rest of Europe,” said Keith Temperton, a sales trader at Forte Securities.
“With talks going around about a delay in reopening, developments related to COVID-19 will be keenly watched by the markets.”
Mortgage lender Nationwide said British house prices jumped by an annual 10.9 per cent, the most in nearly seven years, apparently set to accelerate further as people seek new homes after the pandemic.
Meanwhile, the mid-cap FTSE 250 also rose 0.9 per cent to hit a new record, as Wickes added 4.9 per cent after the retailer said sales had surged in April.
Market movers
The afternoon’s biggest winner was engineering firm Weir Group, who rose four per cent, followed by miner Rio Tinto, up by 3.6 per cent.
Anglo American and Antofagasta also rose 3.5 per cent and 3.4 per cent respectively, rounding off a morning of gains for miners.
HSBC was the morning’s biggest faller, dropping by 1.5 per cent, followed by Imperial Brands’ 1.1 per cent hit.
Meanwhile, Standard Chartered and JD Sports both dipped by 1.1 per cent and 0.7 per cent respectively.
Around the world
Asian markets hit a one-month peak today, buoyed by the global stock rally as the dollar languished near multi-month lows.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.4 per cent, taking its total gains made so far this year to nearly seven per cent.
Taiwan’s and South Korea’s indexes also notched gains, as the latter’s exports logged their sharpest expansion in 32 years last month.
This week’s main event is Friday’s US payrolls data, with markets looking for a signal from the Fed on when it will start tapering its bond-buying programme.
Societe Generale strategist Sebastien Galy said he expected the jobs data to come in below or in line with consensus, but given low levels of equity volatility, markets were primed for a jump on higher-than-expected numbers.
“We remain constructive on risk as we expect a disappointment on non-farm payrolls but the equity volatility market is likely to reprice higher from its rather extreme lows,” he said in a note to clients.