Footsie rallies but fears over new inflation figures
LONDON’S top-flight index rallied higher, taking its cue from American markets as traders tentatively re-entered the fray following a number of brutal sell-offs last week.
The FTSE 100 Index closed up 84.63 points at 7,177.06, rebounding from Friday’s session when the top tier was dragged 78-points lower by fears of potential interest rate rises across the globe.
Concerns that rising inflation may cause central banks to tighten monetary policy has left investors spooked, leading to volatile swings and trillions of pounds to be wiped off global markets.
However, Wall Street was enjoying a bright session yesterday, with the Dow Jones Industrial Average and the S&P 500 rising 1.6 per cent and 1.3 per cent respectively at the time of the London market close.
In European markets, France’s Cac 40 lifted by 1.2 per cent and Germany’s Dax chalked up a 1.5 per cent rise.
On the currency markets, the pound was marginally ahead against the US dollar at 1.38, while sterling slipped 0.1 per cent to 1.12 versus the euro.
Connor Campbell, Spreadex financial analyst, said the UK currency could be in line for a tough session today as markets react to the latest inflation data.
He said: “The morning’s UK inflation reading is expected to slip from 3.0 per cent to 2.9 per cent month-on-month; even if accurate that very slight decline might not be enough to reassure investors fearing the increasingly hawkish tones of the UK’S central bankers.”
In oil, Brent crude was up 1.2 per cent to $63.32 a barrel as the rampant swings on equity markets showed signs of easing.
Focusing on UK stocks, Barclays rose after the Serious Fraud Office (SFO) charged the banking giant over a $3 billion (£2.2bn) loan given to the State of Qatar.
It extends a charge brought against the parent firm for “unlawful financial assistance” last July.
At the time, the SFO had not yet decided whether to charge the Barclays Bank unit over the loan as well. Barclays Bank has now been charged with the same offence.
Both Barclays and its bank unit have said they will defend themselves against the charges. Shares were up 0.4p to 193.3p.
Away from the top tier, Game Digital surged more than seven per cent after tracksuit tycoon Mike Ashley struck a deal with the firm to introduce e-sports concessions into Sports Direct stores. The billionaire retailer, who holds a 26 per cent stake in Game, has now picked up 50 per cent of the high street chain’s Belong e-sports division for £3.2 million. Shares were up 3p to 41p.
The biggest risers on the FTSE 100 Index were Evraz, up 19.2p to 352.3p; NMC Health, up 136p to 3,246p; Shire, up 122p to 3,197p; Rio Tinto, up 107p to 3,895.5p.
The biggest fallers were Severn Trent, down 34.5p to 1,786p; United Utilities, down 8.6p to 684.8p; Paddy Power Betfair, down 70p to 8,080p; SSE, down 7.5p to 1,182p.
NEW YORK
WALL Street’s major indexes rebounded yesterday with broad-based gains as investors regained some confidence after US equities’ biggest weekly drop in two years.
The announcement of President Donald Trump’s budget, including an infrastructure spending plan, helped sectors such as S&P materials and industrials.
But the bigger factor was probably the S&P’S rebound from a key technical level on Friday when it briefly fell 11.8 percent from its January 26 record high.
“Investors probably were mulling things over the weekend and concluded that the economy is fairly strong, earnings are holding up, so there’s no particular reason to panic or sell. So some money probably came back into the market,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston.
The Dow Jones Industrial Average rose 410.37 points to 24,601.27, the S&P 500 gained 36.45 points to 2,656 and the Nasdaq Composite added 107.47 points to 6,981.96.
Michael Purves, chief global strategist at Weeden & Co in New York, said yesterday’s move showed “big, fast, money saying, ‘Wait a second, buy this dip.’”
But while last week’s panic selling appeared to be done, strategists were not calling an end to the pullback. The S&P’S biggest boosts from single stocks came from Apple Inc, which rose 4 per cent, and Amazon. com, up 3.5 per cent.