The FTSE 100 clawed back some of the week’s losses as investors took comfort in Rishi Sunak’s hints at potential additional stimulus.
The blue-chip index opened 1.07 per cent higher before climbing to trade up 1.5 per cent by 1.50pm. However, the FTSE 100 is on track for a two per cent loss across the week.
It came after Rishi Sunak hinted at additional fiscal stimulus in the coming weeks. Speaking to Bloomberg, the Chancellor said government bailouts would only be a “last resort” but stressed his priority is to try and preserve as many jobs as possible.
“If hardly a rousing statement of intent, it was still enough of a hint to allow the FTSE to double down on its early growth,” Spreadex analyst Connor Campbell said.
ECB president Christine Lagarde also said “there is no question” that central banks will need to use “all tools available” to combat a recession.
Investors seemed to turn a blind eye to the continued rise in coronavirus cases in the US. Fears of another wave and subsequent lockdown has weighed on global stocks this week but the FTSE 100 and its European peers started Friday’s session positively. The pan-European Stoxx 600 opened up 0.72 per cent while Germany’s Dax edged 0.69 per cent higher. France’s Cac is trading flat.
This is despite a growing number of US states recording their highest one day increase in daily Covid-19 cases. Texas also announced it would postpone reopening after just one month as new cases hit nearly 6,000.
US stocks drop as banks fall on Fed announcement
Stateside, investors were more cautious than the FTSE as the Dow Jones opened 0.94 per cent lower. The benchmark S&P 500 is down 0.49 per cent while the Nasdaq edged 0.24 per cent lower.
It comes after the Fed’s stress test found US banks were “well capitalised under even the harshest” of downside scenarios.
“So, all the banks have, in essence, ‘passed’, but we know that is only because of the massive injection of Fed liquidity provisions and monetary easing, as well as Congressional stimulus,” said Neil Wilson, chief markets analyst at Markets.com.
Bank of America dropped 3.44 per cent on open, while Goldman Sachs plummeted 5.53 per cent, as the Fed capped dividend payments and barred share repurchases until at least the fourth quarter.
In yesterday’s session bank stocks had driven Wall Street’s gains, helping offset fears of the rising cases.