The FTSE 100 opened higher and Asian markets rose overnight amid cautious optimism about a coronavirus treatment and the reopening of economies.
London’s blue-chip index was 1.1 per cent higher at 6,161 points. The FTSE 250 index was up 1.2 per cent.
European markets also rose, with the continent-wide Stoxx 600 climbing 0.7 per cent. Germany’s Dax gained 1.2 per cent and France’s CAC 40 was up 0.9 per cent.
Overnight, Asian shares rose sharply. Japan’s Nikkei jumped 2.2 per cent and China’s CSI 300 index rose 2.1 per cent. Hong Kong’s Hang Seng climbed 0.6 per cent.
Stock markets have been bullish in recent months. The major indices have risen between 25 and 50 per cent as central banks have pumped money into economies.
European and Asian markets are today chasing Friday’s rally in the US. It was driven by drugmaker Gilead reporting its antiviral treatment remdesivir reduced the risk of death in very ill coronavirus patients.
Yet investors will have their optimism tested this week when some of the US’s biggest companies and banks report second-quarter results.
Given that most major economies spent April and some of May in near total lockdown, the earnings reports are likely to be painful.
Expectations low for earnings season
“However, expectations for all except the stay-at-home stocks are very low,” said Fiona Cincotta, market analyst trading platform City Index. “With the bar set so low, the chances of better than forecast results improves.”
As the FTSE 100 rose, sterling was trading up 0.1 per cent against the dollar at $1.263. The euro was also up 0.1 per cent at $1.131 as investors sold the greenback in favour of stocks.
Oil prices dipped as traders looked to a meeting of the Opec+ group of oil-producing countries. Opec+ is expected to recommend an easing of supply cuts which were agreed to prop up prices.
Brent crude oil was 1.1 per cent lower at $42.80 per barrel. WTI crude, the US benchmark, was down 1.1 per cent at $40.10.
Naeem Aslam, chief market analyst at trading platform Avatrade, said: “The hope is that the cartel will not open the taps up straight away but the decision of increasing the supply will be done in a more gradual manner.”