The FTSE 100 rose at the open despite the UK economy growing less than expected in August, as traders continued to mull the prospect of more US fiscal stimulus.
London’s blue-chip index climbed 0.5 per cent to 6,009 points. The FTSE 250, made up of slightly smaller companies, rose 0.3 per cent.
Asian markets were mixed overnight. China’s SSE composite index rose 1.7 per cent. But Hong Kong’s Hang Seng fell 0.3 per cent and Japan’s Nikkei slipped 0.1 per cent.
The UK economy grew 2.1 per cent in August, much less than the 4.6 per cent expansion economists predicted.
Hospitality was boosted by the Eat Out to Help Out meal scheme. And the accommodation industry grew sharply as Britons chose to holiday at home.
But the massive services sector only expanded by 2.4 per cent in August, the Office for National Statistics said. It left the overall economy 9.2 per cent smaller than in February, before coronavirus struck.
FTSE 100 traders focus on stimulus
However, investors chose to ignore the backward-looking economic data. Instead they focused again on the prospect of more stimulus in the US.
President Donald Trump called off stimulus talks with the Democrats on Tuesday. Yet he then appeared to reignite them, saying he was ready to to deals on individual issues such as support for aviation and stimulus cheques for Americans.
The FTSE 100 and other markets rose yesterday, and continued to climb today.
“EU and US indices were a sea of green yesterday, after US President Trump said that talks with Congress over further covid relief have restarted,” said Charalambos Pissouros, senior market analyst at JFD Group.
He said the President had added to hopes “that some sort of agreement could come before the 3 November 3 presidential election”.
In the wake of the weak GDP reading, UK chancellor Rishi Sunak said he would announce a new phase of the job support programme.
The dollar slipped 0.2 per cent against a basket of other currencies. It was a sign that investors were selling the safe asset in favour of riskier stocks. The greenback’s fall helped sterling rise 0.2 per cent to $1.296.