The FTSE 100 opened higher as Prime Minister Boris Johnson prepared to fly to Brussels for key Brexit talks and after the administration of Donald Trump in the US suggested a $916bn (£685bn) stimulus package.
The index climbed 0.3 per cent to 6,580 points in early trading. Britain’s FTSE 250 index of mid-cap firms rose 0.4 per cent.
European and UK markets have had an uneasy week so far, with the second wave of coronavirus infections and Brexit talks dominating the headlines. But optimism came to the fore today ahead of the Brussels talks and after signs of movement on US stimulus.
In the UK, the pound was up 0.4 per cent against the dollar at $1.341, having previously slipped amid Brexit doubts. Many analysts say they are still hopeful a Brexit deal can be reached.
Germany’s Dax index was 0.6 per cent higher, while France’s CAC 40 climbed 0.4 per cent. The Europe-wide Stoxx 600 was up 0.3 per cent.
US stocks were set to open slightly higher, according to futures prices. The main factor pushing stocks higher was US Treasury secretary Steven Mnuchin presenting a new $916bn stimulus bill to top Democrat Nancy Pelosi.
Investors have been crying out for stimulus for the US economy. Although the offer is well below what Democrats want, they called it progress.
Stimulus hopes buoy global markets and FTSE 100
Overnight in Asia, China’s SSE Composite Index fell 1.1 per cent after weak consumer price data.
But much of the region rose, with Japan’s Nikkei up 0.7 per cent and Hong Kong’s Hang Seng 1.3 per cent higher on US stimulus optimism.
US stock markets yesterday hit new all-time highs after opening lower. “The turnaround in sentiment was underpinned by the growing prospect of additional fiscal stimulus this side of the New Year,” said Chris Scicluna of Daiwa Capital Markets.
“In Europe, the focus remains on politics. Sterling has been stable ahead of this evening’s Brussels dinner date between Johnson and von der Leyen, which aims to get the EU-UK free trade agreement negotiations back on track even if a deal tonight is highly unlikely.”
The pound’s rise held the FTSE 100 back slightly compared to its European peers. A higher pound makes the overseas earnings of many FTSE constituents worth less in relative terms.