FTSE 100 breaks 6,000 and US stocks rise amid economic optimism
The FTSE 100 rose sharply, surpassing 6,000 points, as investors looked past rising coronavirus cases and cheered positive economic data.
London’s blue-chip index was 2.2 per cent higher in afternoon trading at 6,028 points. The mid-cap FTSE 250 was up 1.2 per cent.
Read more: HSBC profit plummets due to coronavirus pandemic
On Wall Street, the S&P 500 was 0.6 per cent higher in early trading. The Dow Jones was up 0.6 per cent and the Nasdaq was one per cent higher.
In Europe, Germany’s Dax soared 2.9 per cent. France’s CAC was 2.3 per cent higher and the continent-wide Stoxx 600 climbed 2.1 per cent.
European investors were boosted by survey data that showed the continent’s manufacturing sectors growing strongly in July.
In the Eurozone, “growth of new orders in fact outpaced production, hinting strongly that August should see further output gains,” said Chris Williamson, chief business economist at IHS Markit.
Technology stocks also rose sharply, boosted by the stellar results of US tech giants Facebook, Amazon, Apple and Google last week. The Stoxx Europe 600 technology index was up more than two per cent.
FTSE 100 shrugs off dire HSBC results
The FTSE 100 rose despite index stalwart HSBC’s shares slumping after its profit plummeted. Profit before tax dropped 65 per cent at the lender to $4.3bn (£3.3bn) from higher expected credit losses.
The UK and Hong Kong-focused lender plunged in early trading. They were 2.2 per cent lower in the afternoon session.
“The impact of the pandemic has been extremely evident in bank earnings in recent weeks,” said Craig Erlam, senior market analyst at currency firm Oanda. “HSBC this morning became the latest to make additional huge loan provisions.”
The FTSE 100 was helped, however, by survey data that showed UK manufacturing output grew at its fastest pace since 2017 in July. Hopes of a US stimulus bill also lifted sentiment.
Lloyds was the biggest riser on the index, with the lender’s shares rising 5.7 per cent. Packaging company Smurfit Kappa rose 5.4 per cent and broker Hargreaves Lansdown jumped 4.9 per cent.
Jet engine maker Rolls Royce was the biggest faller as the recovery in the tourism sector was thrown into doubt by rising coronavirus cases around the world. It dropped 3.2 per cent as British Airways-owner IAG fell 2.1 per cent.
US stocks open higher amid stimulus talks
US stocks opened higher as investors chose to look past increasing coronavirus cases towards the chances of US Congress passing a long-awaited stimulus bill.
Ben Laidler, analyst at Towers Hudson, said: “We see room for an upside surprise in this week’ fiscal stimulus talks.”
However, investors are keeping a wary eye on the coronavirus case count. Global cases have now topped 18m. In the UK, the government is reportedly considering new measures to lockdown hotspots, including London-wide restrictions.
Investors have been betting on another round of US fiscal stimulus. But White House chief of staff Mark Meadows said he was not optimistic about a deal being reached soon.
US-China tensions are also weighing on the FTSE 100 and global markets. Reports said Mike Pompeo, the US Secretary of State, will clamp down on an array of Chinese state-controlled software companies.
Gold was 0.2 per cent lower in early afternoon trading at $1,972 an ounce. That was down from the all-time high of above $1,980 an ounce that it touched last week. Inflation expectations and ultra-low real bond yields have driven up the yellow metal.