Thursday 29 July 2021 4:36 pm | Updated: Monday 09 August 2021 12:32 pm

US stocks climb to record high on positive economic growth

Wall Street climbed to record highs on Thursday as investors piled into stocks after new figures revealed the US economy is recovering quickly from the Covid crisis.

The S&P 500 hit record levels in opening trading, but scaled back to rise 0.53 per cent to 4,424 during the morning session.

Likewise, the Dow Jones and the Nasdaq both reached record highs during early trading, but pared back slightly to rise 0.48 per cent and 0.41 per cent respectively.

Investors were boosted by a string of positive company earnings and data showing the US economy grew at a 6.5 per cent annualised rate in the second quarter of this year.

The growth rate was significantly lower than analysts’ predicted rate of around eight per cent.

Yields on ten-year Treasuries dipped slightly to 1.25 per cent.

Strong earnings day propels FTSE 100

A string of positive first half earnings, companies announcing rounds of share buybacks and restoring dividends helped lift London’s FTSE 100 on Thursday afternoon.

The capital’s premier index rose 0.84 per cent to 7,075 during afternoon trading.

Several companies published strong first half results today, prompting them to return capital back to investors through share buyback programmes.

Oil giant Royal Dutch Shell announced it will boost its dividend and embark on a share buyback drive today, while Lloyds said it would restore its dividend, following on from Barclays reinstating its dividend yesterday.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Patience has been the name of the game for Shell investors who have been forced to watch and wait as the energy giant has been undergoing a painful green metamorphosis while grappling with the price shock of the pandemic.”

“That stoicism, was sorely tested, but is now being rewarded with a slap on the back of rising returns, with $2 billion of share buybacks and an increase in the dividend to 24 cents a share.”

Several companies also posted record first half profits, indicating that the economic recovery from the depths of the pandemic accelerated markedly in the first six months of 2021.

Michael Hewson, chief market analyst at CMC Markets UK, said: “With private equity companies already sniffing around some of the more undervalued sectors of the UK economy, maybe some of today’s updates could raise optimism that there still remain a significant number of UK companies that may have further to go in terms of share price upside.”

The domestically-focused FTSE 250 inched up on the news as well, up 0.14 per cent, while AIM shares gained 0.29 per cent.

The pound gained ground on the greenback, up 0.55 per cent to $1.39.

Winners and losers

The day’s best performer was business services group Rentokil, soaring 7.4 per cent to reach 566.40p as it upped profit forecasts for the next six months and boosted its dividend.

Publisher Informa came second, rising 5.91 per cent to 512.60p after it hiked revenue forecasts.

Miner Anglo American came third, adding 5.62 per cent to rise to 3,301p after it announced it would return an extra $2bn to investors as it doubled revenue.

BT led the day’s losses, plummeting 7.5 per cent to 170.15p after its results showed first quarter revenues fell sharply.

The day’s second worst performer was manufacturer Smith & Nephew, dropping 6.36 per cent to 1,464p despite posting a 48 per cent increase in second quarter revenues.

Energy supplier SSE fell 4.04 per cent to 1,471.50p.

Around the world

Asian shares rebounded from a pummelling over recent days as sources said Chinese regulators have told banks that Sino firms can list in the US if they complied with listing requirements.

Hong Kong’s Hang Seng climbed 3.3 per cent, while China’s CSI 300 jumped 1.89 per cent and Japan’s Nikkei added 0.73 per cent.

European stocks also hit a record high on Thursday, with the Stoxx 600 reaching 463 points in afternoon trading.