Global markets rally as Fed taper fears ease
Global markets rallied today, driven by expectations that the US Federal Reserve will outline its plan to rein in the wave of monetary stimulus unleashed in response to the Covid crisis at Jackson Hole this week receding.
The blue-chip S&P 500 rose 0.29 per cent to 4,492.46 points in early afternoon trading, while the Dow Jones jumped 0.24 per cent to 35,420.73 points.
The tech-heavy Nasdaq hit a record high today, up 0.57 per cent to 15,027.21 points.
The gains have been primarily driven by investors tempering predictions that Fed chair Jerome Powell will announce the central bank’s strategy for gradually winding down its asset purchase programme during his address at the annual monetary policy symposium on Friday.
Yields on 10-year Treasuries bumped up to 1.29 per cent.
Danni Hewson, financial analyst at AJ Bell, said: “Despite, or perhaps because of the drip drip of Covid concerns, the [Nasdaq] hit another record high.”
“Will a rise in cases change the narrative at this week’s Jackson Hole symposium? There are many considering just that possibility.”
Craig Erlam, senior market analyst at OANDA Europe, said: “Stock markets may get another helping hand from Jerome Powell this week when he appears at the annual Jackson Hole event.”
“Until recently, this looked the perfect platform to lay the groundwork for a September taper announcement but some concerning economic releases and a surge in delta cases in the US may see the Fed adopt a more cautious stance for now.”
London markets track global gains as travel stocks soar
London’s markets followed Wall Street higher today, led by travel stocks soaring as investors took note that the resurgence in new Covid cases globally has failed to trigger a severe crackdown on international travel restrictions.
The FTSE 100 closed up 0.24 per cent at 7,125.78 points, while the domestically focussed FTSE 250 added 0.61 per cent to reach 23,886.01 points.
The pound inched up 0.08 per cent against the dollar to buy $1.3730.
Winners and losers
Travel stocks such as IAG, Rolls-Royce and Whitbread, whch owns the Premier Inn hotel chain, pushed London’s premier index higher, up 2.67 per cent to 164.74p, 3.99 per cent to 118.28p and 4.53 per cent to 3,183p respectively.
They were supported by miners Evraz, jumping 3.21 per cent to 578p, and Antofagasta, climbing 3.01 per cent to 1,471p.
In the fallers’ column, Sainsbury’s slipped back 4.85 per cent to close at 323.50p, but its price is still hovering at historically high levels after investors piled into the supermarket chain amid growing takeover chatter.
Tobacco firm Imperial Brands finished 2.18 per cent lower at 1,524.50p. Bargain retailer B&M weighed on the blue-chip index, dipping 1.79 per cent to 569.80p.
On the midcap FTSE 250, EasyJet was a big winner today, surging 5.32 per cent to 843.40p. Tui added 5.29 per cent to close at 324.30p to cap off a great day for travel stocks.