Tuesday 29 December 2020 2:37 pm

Wall Street and FTSE surge as US stimulus and Brexit deal lift sentiment

Wall Street hit fresh highs and the FTSE 100 posted strong gains today as investor confidence mounts in the final days of the year.

The S&P 500 and Dow Jones were up 0.49 per cent and 0.57 per cent respectively as markets opened this afternoon. The Nasdaq also gained 0.42 per cent.

Read more: Wall St hits a record high as optimism builds at the end of 2020

It came after the FTSE 100 rose sharply this morning in the first session since the post-Brexit trade deal was confirmed.

Traders packed up for the festive break two hours before the announcement of the pact on Christmas Eve.

But this morning saw a burst of early trading, with the FTSE up more than two per cent at 6,637 by 2.30pm.

Good news on post-Brexit goods trade was matched by optimism for the global economy after President Donald Trump finally approved a $900bn stimulus package in the US.

Wall Street had hit a record high on Monday, with the Japanese Nikkei index matching that feat overnight.

Read more: Tech jobs boom signals bright future for UK economy, says digital secretary

Astrazeneca rises on vaccine hopes

Astrazeneca was one of the top risers on the FTSE 100 this morning amid growing optimism that its vaccine, developed with the University of Oxford, could soon received the green light from regulators.

Shares in the British pharma giant were up more than 4.5 per cent.

Intercontinental Hotels Group and British Airways owner IAG were also trading higher amid renewed hopes for the embattled travel industry.

“The unwrapping of the Brexit deal and a stimulus package for the US economy have propelled shares higher in Europe, with another boost of optimism, now foundations are being laid for a sustained recovery,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The mobilisation of huge vaccination programmes are an extra shot in the arm, helping to offset concerns about spikes in cases.”

Financial services worries linger

The more domestically-focused FTSE 250 — which is less impacted by cross-border trade deals — was also up more than two per cent.

However, banks and financial services providers such as Ninety One and Sabre were among the fallers.

“This suggests that nerves remain over what deal will be struck in 2021 when it comes to financial services and indeed services overall, which provides a far greater percentage of UK GDP (and the government’s tax take) than fishing or manufacturing,” said Russ Mould, investment director at AJ Bell.

“The free trade agreements from Christmas Eve will be taken positively by the markets, in the view that they may help to unlock investment and employment decisions which have been on ice since June 2016.

“Yet the lack of visibility on services could continue to nibble away at sentiment until a further agreement is reached, although this is not to say that Brexit will be the only factor at work when it comes to shaping near-term market sentiment.”