FTSE fightback: Markets surge to reach fresh 2016 highs as optimism returns to the City

Jake Cordell
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The FTSE has bounced back fighting from entering official bear market status back in January
The FTSE has bounced back fighting from entering official bear market status back in January (Source: Getty)

The FTSE 100 enjoyed a spring rally today as stocks surged on the back of a rebound in the price of oil.

The index of bluechip companies closed at its highest level since December 2015, up 0.8 per cent on the day at 6,405. It marks a far cry from the dark days of February, when the benchmark index crashed to a low of 5,536 and talk of bear markets stalked the City.

“It feels the worst is over from an economic standpoint and this is bringing hesitant investors out of the woodwork,” Joshua Mahony, market analyst at IG, told City A.M.

Read more: Citigroup says the commodities rout is over

Brent Crude closed the day hovering around the $44 (£30.59) a barrel mark, continuing its rally after the Organisation of the Petroleum Exporting Countries (Opec) failed to strike a deal in Doha to freeze production.

“The resilience of oil, which no longer has the support of a functioning cartel to support prices, is encouraging risk-taking across the board,” Jasper Lawler, market analyst at CMC markets said. “Traders have wiped away the sweat brought on by the breakdown of the oil talks in Doha and are pressing on the accelerator pedal.”

After a long rout, London’s commodities stocks enjoyed a green sweep across trading screens on the oil fillip and after a strong performance from several metals. Gold, silver, copper and platinum all rose.

Read more: Negative interest rates are helping Europe's firms

Anglo American topped the charts, up by 8.5 per cent at 752.5p a share, followed by Antofagasta, Glencore, BHP Billiton and Fresnillo, in a glowing day for the city’s legion of miners.

The pound rose by 0.81 per cent against the dollar, hitting $1.4396, its highest level since the end of March. Before today's revival, sterling had suffered a 10 per cent depreciation against a basket of currencies since last November.

In Europe, the German Dax climbed 2.27 while the French Cac put on a weighty 1.32 per cent.

Read more: Fitch warns on oil majors' profits

In the US, the Dow Jones clung on above 18,000 to keep it in positive territory for the past year.

Chicago's notorious “Vix index” – a measure of implied volatility on the S&P 500 often referred to as the “fear index” closed at 13.09 on Monday night – its lowest close to a session since 17 August 2015 as traders paused for breath after a frantic start to the year.

However, there were some words of caution despite yesterday’s optimism, with analyst Mahony warning: “The road back to the top will be bumpy.”

The FTSE 100 is still 11 per cent off its highest ever level reached last April, and futures markets indicate the market could struggle to emphatically break through the 6,300 mark until after the EU referendum.