Tuesday 15 September 2020 3:34 pm

FTSE 100 and US stocks jump after strong Chinese industrial data

The FTSE 100 rose sharply and US stocks opened higher as investors reacted well to stronger-than-expected economic data from China.

Britain’s main stock index was up nearly one per cent during the afternoon session at 6,085 points. The FTSE 250 index – which is made up of slightly smaller firms – climbed 0.6 per cent.

Read more: BCC president warns Boris Johnson of ‘difficult winter ahead’

The pan-European Stoxx 600 rose 0.7 per cent. And Germany’s Dax was up 0.35 per cent.

Overnight in Asia, China’s CSI 300 rose 0.8 per cent after August industrial output grew 5.6 per cent, beating expectations.

The Chinese industrial figures showed that output rose the most in eight months in August. Retail sales also grew, suggesting that Chinese consumers are rediscovering their taste for spending after the coronavirus pandemic.

“The more inclusive gains are promising and investors may also be encouraged by the stabilization we’re seeing in the tech space,” said Craig Erlam, senior market analyst at currency firm Oanda.

“Investors clearly weren’t interested in the troubling longer-term outlook for the UK jobs market, instead focusing on the short-term beats in the morning’s latest report”, added Spreadex financial analyst Connor Campbell.

Miners and retailers lift FTSE 100

The Chinese economic data was good for the FTSE 100, which is dominated by multinationals reliant on global industrial demand.

“It is another positive morning for stock markets, with miners bolstering the FTSE 100 following an improvement in Chinese data,” said Chris Beauchamp, chief market analyst at trading platform IG.

Miners Glencore, Rio Tinto, Anglo American and BHP did well, each rising more than two per cent.

Yet online supermarket Ocado was the biggest riser, climbing 8.9 per cent after it said sales surged in the third quarter as customers turned to online shopping.

Retail revenue surged 52 per cent to £587.3m in the 13 weeks to 30 August due to high demand for home grocery deliveries.

Read more: Ocado sales surge as consumers switch to online shopping

The FTSE 100’s rise came despite figures showing the British economy shed 695,000 jobs between March and August.

Sterling rose sharply against the dollar despite the passing of a controversial Brexit bill. It jumped 0.6 per cent to $1.292.

Wall Street extends Monday’s rally

Like the FTSE, US investors were upbeat as data emerging from China indicates an economic rebound. Investors were also buoyed by tech shares extending Monday’s rally in the wake of a flurry of activity in the sector.

The Nasdaq and S&P 500 both recovered somewhat from two weeks of falls on Monday. The former rose 1.9 per cent and the latter climbed 1.3 per cent.

Markets were boosted as US chip giant Nvidia confirmed the takeover of UK chip designer Arm Holdings for $40bn (£31bn). 

And Tiktok agreed a “technology partnership” with US computer firm Oracle.

The benchmark S&P 500 opened 0.9 per cent higher on Tuesday. The tech-heavy Nasdaq, emboldened by yesterday’s gains, climbed a further 1.4 per cent. The Dow Jones rose 0.5 per cent to 28,138 points.

Wall Street was also boosted by German economic data which showed an unexpected rise in economic confidence. The index rose to 77.4 in September, up from 71.5 in the previous month.

Beauchamp said: “Stock markets continue to make gains, after US markets came storming back yesterday after a difficult first half of September.”

“A light economic calendar ahead gives equities the space to make further gains, although we can expect momentum to stall as we near the [US Federal Reserve] decision tomorrow.”

Read more: Nvidia to buy UK chip designer Arm for $40bn

Tech investors will be looking ahead to Apple’s expected product launch this afternoon. Meanwhile, macro investors await the result of the Fed’s policy meetings.

Fed officials will convene their final meeting before the US election on Wednesday and the central bank is expected to set new economic and interest rate projections.

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