US stocks have joined the FTSE 100 in the green as investors continue to bet on a relatively swift economic recovery from coronavirus, with spirits high as countries reopen their economies.
London’s main stock index was up one per cent in afternoon trading at 6,205 points. It had risen more than one per cent yesterday.
Stocks in Europe also rose. The continent-wide Stoxx 600 was up 1.2 per cent and Germany’s Dax index was 0.6 per cent higher.
US stocks moved higher at the opening bell. The S&P 500 index was up 0.2 per cent and the Dow Jones was also 0.2 per cent higher.
However, US-China tensions capped gains in the wake of China’s decision to try to impose a security law on the semi-autonomous city. Investors are nervous that a return to a trade war could derail the expected economic rebound.
Nonetheless, global stock markets are well up for the week. “Optimism around vaccines, economies reopening, and the unveiling of a proposal for a €750bn (£670bn) EU recovery fund outweighed another exchange of salvos in the recent US-China sparring match,” said Jim Reid of Deutsche Bank.
European stocks were helped by European Commission president Ursula von der Leyen yesterday proposing a radical recovery plan. It would see the EU distribute €500bn in the form of grants and €250bn in loans to member states.
Optimism was generally high in the markets as countries took further steps to reopen their economies.
FTSE 100 lifted by reopening
On the FTSE 100, airline Easyjet rose after it announced it said it would slash its staff numbers by up to 30 per cent of its staff and reduce the size of its fleet amid the collapse in global air travel.
Its shares were up 4.7 per cent as investors cheered the cost-cutting measures. Easyjet and its fellow airlines have been among the worst-hit stocks amid the coronavirus pandemic.
The UK’s FTSE 250 followed the FTSE 100 higher and rose one per cent. It was boosted by cinema group Cineworld, which surged 21.5 per cent after it said it planned to reopen all its cinemas by July.
David Madden, market analyst at trading platform CMC Markets, said that Cineworld “also believes it has the funding to survive even if cinemas remain closed for the rest of the year”.
“These days traders are really focused on financing and Cineworld appear to be in a strong position to see out 2020.”
US stocks helped by Boeing
US stock markets have continued to climb even as unemployment continues to skyrocket. Data out today showed that more than 40m Americans have made new jobless claims since the pandemic began. Another 2.1m claimed last week.
Yet Wall Street trading was boosted by Boeing, with the plane-maker resuming production of its 737 Max jets. The firm’s shares jumped 7.5 per cent.
On the S&P 500, pharmaceutical firms did well, with Labcorp and Regeneron among the biggest risers.
Oil prices recovered after an earlier fall, which was driven by doubts that the recovery in demand could be less pronounced than expected.
Brent crude, the global benchmark, rose 0.2 per cent to $32.90 per barrel. WTI, the US benchmark, slipped 0.1 per cent to $34.80 per barrel.
On the currency markets, the pound rose 0.2 per cent against the dollar to $1.229. On an index against other currencies, the dollar slipped 0.3 per cent.
Doubts continue about recent rally
Craig Erlam, market analyst at currency platform Oanda, said markets such as the FTSE 100 could be derailed by a spat between the US and China over Hong Kong.
He said that with US President Donald Trump “facing re-election later this year and China becoming increasingly confrontational, this heightened hostility isn’t going anywhere soon”.
Some analysts continued to question the recent stock market rally. Chris Beauchamp, chief market analyst at IG, said: “Resilience in equities comes at an odd time… as data begins to worsen as we head further into the second quarter and US-China tensions begin to rise.”
“But overall investors continue to look beyond the second quarter, hoping for growing signs of a rebound.”