Monday 10 August 2020 2:53 pm

FTSE 100 climbs on economic recovery hopes

The FTSE 100 pushed higher today as investors shrugged off concerns about ongoing tensions between China and the US and focused on positive signs of economic recovery.

The blue-chip index was up 0.93 per cent at 6,087 points in early trading, before dipping to a 0.42 per cent rise shortly before 3pm.

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The positive start to weekly trading comes despite a deterioration in relations between the world’s two largest economies that has weighed on sentiment in recent weeks.

Last week US President Donald Trump signed two executive orders banning American companies from doing business with Tiktok and Wechat, which is owned by Chinese tech giant Tencent.

The bans come into force in 45 days’ time, while the US has also sanctioned 11 US and Hong Kong officials.

But fears over the escalating trade war were offset by improved data from both the US and China, including a second consecutive month of consumer inflation in China.

The FTSE 100 was also buoyed by a one per cent increase in oil prices after Saudi Aramco provided an upbeat view of Asian demand and Iraq pledged to deepen supply cuts.

Shares in BP and Royal Dutch Shell rose 3.24 per cent and 2.27 per cent respectively.

However, Fiona Cincotta at City Index warned the FTSE’s gains would likely be capped by continued concerns about diplomatic tensions, a dearth of corporate releases and a focus on US stimulus talks.

Connor Campbell, financial analyst at Spreadex, said there was a “list the length of your arm why investors should be feeling edge”.

“Setting all of that aside, the markets decided to instead celebrate the latest payroll tax-cutting executive orders from Trump, designed to bypass the blockade in Congress regarding coronavirus relief,” he added.

The FTSE 250 outperformed its more international counterparts on the blue-chip index, gaining 0.7 per cent to hit a seven-week high before settling up 0.55 per cent shortly before 3pm.

“This comes despite fears that Boris Johnson could spark a second wave of business closures in a bid to ensure schools could reopen in September,” said Joshua Mahoney, senior market analyst at IG.

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“With the furlough scheme expected to end in October, there are still significant questions that loom large for investors, yet the huge global fiscal and monetary stimulus push appears to be helping to paper over the cracks for markets.”

Germany’s Dax was up 0.33 per cent at 12,717 points, while French benchmark Cac 40 also rose 0.51 per cent to 4,914.