The UK’s FTSE 100 has closed higher after a choppy day of trading as hopes of a recovery from the coronavirus downturn offset dire economic data and doubts about a new vaccine.
The blue-chip index rose 1.08 per cent to 6,067 points, aided by a surge in data firm Experian, which posted strong results.
European markets also climbed into the green after earlier falls. The continent-wide Stoxx 600 was up just over per cent. Germany’s Dax index closed 1.5 per cent higher.
Global stocks had rallied on Monday on hopes over a a vaccine. The rally was driven by pharmaceutical firm Moderna saying its coronavirus drug had shown positive results.
However, new data from an early-stage trial is not conclusive enough to yet show it is effective, according to medical experts cited by news website Stat.
The report suggests that any effective treatment for coronavirus is a long way off. The virus has now killed more than 320,000 people around the world.
But markets soon overcame these jitters as investors regained hopes of an economic recovery and oil prices strengthened.
“The caution of this morning is a distant memory, as the march higher for indices resumes,” said Chris Beauchamp, chief market analyst at IG.
“Data from various countries and parts of the US still do not suggest a second wave of infections, a theme that is key for further gains in the market.
“Yesterday’s doubts about new infections and caution surrounding the Moderna vaccine has been shrugged aside.”
The FTSE was likely also boosted by comments from Bank of England governor Andrew Bailey, who refused to rule out negative interest rates.
US stocks rise on upbeat outlook
It was a positive start to trading on Wall Street as well this afternoon. The S&P 500 was trading 1.9 per cent higher, while the Dow Jones and Nasdaq rose 1.7 per cent and 2.2 per cent respectively.
US stocks were pushed up by upbeat earnings reports from retailers as states begin to reopen their economies.
A survey by Bank of America revealed two-thirds of 223 fund managers believed recent gains were a bear-market rally.
“Rising close to 400 points, the Dow returned to 24,600, pretty much reversing the losses incurred last night thanks to some solid earnings, persistent optimism regarding a vaccine and the hopes of some more Fed stimulus down the line,” said Connor Campbell at Spreadex.
“That meant the Dow ignored Donald Trump’s latest inflammatory comments towards China, the President claiming it was the ‘incompetence’ of Beijing that caused the virus to spread.”
FTSE 100 choppy after Monday’s surge
The FTSE 100 was pulled in different directions by positivity about the reopening of the economy and dire economic data.
It was weighed down earlier today by weak inflation data, which prices growing just 0.8 per cent in April. That is well below the Bank of England’s two per cent target and reflects plunging oil prices and demand amid coronavirus.
Yet credit data firm Experian surged more than eight per cent on the FTSE 100. It posted strong annual results, reflecting high demand for its analytics products in the US.
On the corporate front, jet engine-maker Rolls Royce announced it would slash around 9,000 jobs. Yet its shares rose more than two per cent as investors cheer the cost-cutting.
Marks & Spencer closed more than 10 per cent higher after it said it was closing stores and reducing fashion lines to improve its outlook.
On the currency front, the pound was up 0.2 per cent at $1.227. This reflected a weaker dollar as risk sentiment returned to markets.
IG’s Beauchamp said that while markets would likely face further challenges throughout the summer, the “wall of worry is there to be climbed”.
“If recent price action is any guide stock markets will continue to opt for the positive narratives, even as investors wait for this summer’s dire earning season, expected to be one of the worst on record,” he said.