Receding tapering fears propel FTSE 100 to three-week high

Waning fears over central banks in developed economies scaling back monetary stimulus measures helped to propel London’s FTSE 100 to its highest level for three weeks today.

The capital’s premier-index gained 0.71 per cent to hit 7,189.00 points heading into the final hour of trading.

The blue-chip index was led higher by advertisers and broadcasters on hopes that a resurgence in commuter levels will prompt firms to step up marketing spend. The likes of ITV, BT and WPP were all up more than 1.75 per cent today.

Market sentiment has improved in recent weeks as investors have become more confident that the US Federal Reserve will refrain tightening monetary policy soon after a much weaker-than-expected jobs report last Friday.

A poor reading in the latest edition of the IHS Markit construction PMI is did not knock market sentiment, despite similar trends being displayed by the manufacturing and services surveys.

Markets are waiting to see whether central bank policymakers’ response to a string of key economic announcements this week before making any significant moves, according to Michael Hewson, chief market analyst at CMC Markets.

“As we look ahead to the new week the main focus now shifts towards the European Central Bank rate meeting on Thursday, with some questions being increasingly raised about the pace and sustainability of its bond buying program, after CPI jumped to a ten year high of 3 per cent last week.”

“This jump in CPI is causing quite a few governing council members to shift uncomfortably in their seats, particularly those in northern Europe.”

The domestically-focused mid-cap FTSE 250 index added 0.25 per cent to reach 24,253.51 points, driven higher by financials, while AIM shares surged 0.33 per cent to 1,314.51 points.

Winners and losers

Broadcasters and advertisers led the day’s gains on the blue-chip index, with ITV leading the way, climbing 2.45 per cent to 116.95p.

Private equity firm Intermediate Capital Group was the day’s second best performer, rising 1.95 per cent to 2,297.00p, while BT came third, up 1.88 per cent to 165.10p.

Losses were minimal on the blue-chip index today, with miner Rio Tinto down 1.09 per cent to 5,349.00p. Property developer British Land was the second worst performer on the day, sliding 0.78 per cent to 537.60p, while Premier Inn parent company Premier Inn was down 0.66 per cent to 3,185.00p.

Around the world

Asian shares soared in overnight trading, propelled higher by the increasing likelihood of a wave of stimulus measures being unleashed following the announcement of Japanese prime minister Yoshihide Suga’s resignation on Friday.

Japan’s Nikkei gained 1.83 per cent to reach 29,659.89 points, while China’s CSI 300 rose 1.87 per cent to 4,933.73 points.

Jeffrey Halley, senior market analyst for the Asia Pacific at OANDA, said: “Friday’s US employment data substantially lowered the risks of a Fed taper this year, which is playing out well in Asian equity markets.”

“Receding tapering fears and rising expectations of stimulus locally after soft data last week has lifted Japan and China markets, in particular.”

London’s strong performance was extended into the continent this morning – the Stoxx 600 and the Dax 30 were up 0.73 per cent and 1.04 per cent respectively.

US markets were closed today for Labour Day.