The FTSE 100 and US stock markets rose sharply today as investors cheered the prospect of more stimulus for the UK economy and followed the lead of Asian markets.
London’s index of blue-chip companies was 1.87 per cent higher this afternoon at 6,2572.5 points. The FTSE 250 index of slightly smaller firms rose 1.27 per cent.
Wall Street opened well in the green, with the S&P 500 up 1.2 per cent shortly after the bell. The Dow Jones was also 1.25 per cent higher and the Nasdaq was up 1.7 per cent, taking it to a record intraday high.
In Europe, Germany’s Dax was 1.66 per cent higher. France’s CAC 40 was up 1.57 per cent and the continent-wide Stoxx 600 had risen 1.3 per cent.
The rise on the FTSE 100 was led by housebuilders after reports said stamp duty could be slashed.
Market optimism was also boosted by a surge in China’s CSI 300 index. It jumped 5.7 per cent overnight as the state media sang the economy’s praises and investors reacted to positive recent data.
Global stock markets are now around 20 to 40 per cent above their March nadir. They have continued to rise as economies have reopened, supported by huge stimulus measures from the world’s central banks.
Prospect of stamp duty cut pushes up FTSE 100
Chancellor Rishi Sunak is set to announce plans this week to lift the threshold at which home-buyers start paying tax duty to as high as £500,000 from £125,000, according to The Times.
Barratt soared 7.4 per cent as the reports combined with an upbeat trading statement. Persimmon jumped 4.6 per cent while Taylor Wimpey was close behind with a 4.3 per cent rise.
Bullish investors were further bolstered by survey data that showed the construction sector rebounded sharply in June.
“While the resumption of operations at Barratt certainly provided a boost, news of a healthy order book has boosted sentiment for a potential strong rebound in the second half,” said Josh Mahony, senior market analyst at trading platform IG.
“Hopes of a stamp duty holiday or help-to-buy extension are providing another element of hope for investors in the sector.”
“A so-called mini-Budget from UK chancellor Rishi Sunak on Wednesday will come with significant expectations attached after a series of measures were widely trailed in the weekend press,” added AJ Bell’s investment director, Russ Mould.
FTSE 100 investors will also have taken note of the scenes across the country on Saturday. Pubs, restaurants and cafes were allowed to reopen for business.
Global markets helped by surge in China
Chinese shares rocketed overnight as state media talked up the economy and investors reacted to positive data. China’s CSI 300 index soared 5.7 per cent. It was the biggest one-day rise in over a year.
Other Asian markets rose too. Hong Kong’s Hang Seng climbed 3.8 per cent, putting it in a technical bull market – a 20 per cent rise. Japan’s Nikkei finished up 1.8 per cent.
The rally was in large part driven by a bullish front-page editorial in the state-run Chinese Securities Journal.
“Investors certainly look like they believe China, the world’s second biggest economy, will lead a global recovery,” said Fawad Razaqzada, market analyst at trading platform Think Markets.
Saxo Bank chief economist Steen Jakobsen said: “Retail investors dominating the Chinese equity market are buying the story about the prospects for a healthy bull market.”
“The strong move in Chinese equities seems to be cascading into other markets such as developed equities and crude oil.”
Markets shrug off rise in US coronavirus cases
The march of global stock markets continues despite the number of coronavirus cases surging in the US. States such as Florida and Texas have stepped back from plans to reopen, in moves likely to damage their economies.
Jim Reid of Deutsche Bank noted that there has been “a continued strong rise in new cases”. But he pointed out that fatalities “aren’t going up anywhere near as much as they did in the first wave”.
Oil prices climb and FTSE 100 pushes up sterling
The pound was 0.3 per cent higher against the dollar as the FTSE 100 rose at $1.252. But by 3.20pm sterling was almost flat, at 0.09 per cent up.
The euro was up 0.8 per cent against the dollar at $1.134. It came as investors moved out of the greenback, a safe-haven asset, in favour of stocks.
Oil prices traded higher as Brent crude hit $43.49 per barrel, and gold continued to prove an attractive destination for worried investors. This morning its value rose to $1,776.26 per ounce after approaching an eight-year high last week.