Receding Tapering Fears Propel FTSE 100 to 3-Week High
Waning fears over central banks in developed economies scaling back monetary stimulus measures helped to propel London’s FTSE 100 to its highest level for 3 weeks today.
The capital’s premier index gained 0.71 percent to hit 7,189.00 points heading into the ultimate hour of trading.
The blue-chip index was led higher by advertisers and broadcasters in hopes that a resurgence in commuter levels will prompt firms to intensify marketing spend. The likes of ITV, BT, and WPP were all up quite 1.75 percent today.
Market sentiment has improved in recent weeks as investors became more confident that the US Federal Reserve System will refrain from tightening monetary policy soon after a way weaker-than-expected jobs report last Friday.
A poor reading within the latest edition of the IHS Markit construction PMI doesn’t knock market sentiment, despite similar trends being displayed by the manufacturing and services surveys.
Read also
Construction Sector is a Lucrative Investment Opportunity
Markets are waiting to ascertain whether financial institution policymakers answer a string of key economic announcements in the week before making any significant moves, consistent with Michael Hewson, the chief analyst at CMC Markets.
“As we glance ahead to the new week the most focus now shifts towards the ECU financial institution rate meeting on Thursday, with some questions being increasingly raised about the pace and sustainability of its bond-buying program after CPI jumped to a ten-year high of three percent last week.”
“This jump in CPI is causing quite a few governing council members to shift uncomfortably in their seats, particularly those in northern Europe .”
The domestically-focused mid-cap FTSE 250 index added 0.25 percent to succeed in 24,253.51 points, driven higher by financials, while AIM shares surged 0.33 percent to 1,314.51 points.
Winners and losers
Broadcasters and advertisers led the day’s gains on the blue-chip index, with ITV leading the way, climbing 2.45 percent to 116.95p.
Private equity firm Intermediate Capital Group was the day’s second-best performer, rising 1.95 percent to 2,297.00p, while BT came third, up 1.88 percent to 165.10p.
Losses were minimal on the blue-chip index today, with miner Rio Tinto down 1.09 percent to five,349.00p. Property developer British Land was the second-worst performer on the day, sliding 0.78 percent to 537.60p, while Premier Inn parent company Premier Inn was down 0.66 percent to three,185.00p.
Around the world
Asian shares soared in overnight trading, propelled higher by the increasing likelihood of a wave of stimulus measures being unleashed following the announcement of Japanese prime minister Yoshihide Suga’s resignation on Friday.
Japan’s Nikkei gained 1.83 percent to succeed in 29,659.89 points, while China’s CSI 300 rose 1.87 percent to 4,933.73 points.
Jeffrey Halley, the senior analyst for the Asia Pacific at OANDA, said: “Friday’s US employment data substantially lowered the risks of a Fed taper this year, which is playing out well in Asian equity markets.”
“Receding tapering fears and rising expectations of stimulus locally after soft data last week has lifted Japan and China markets, especially .”
London’s strong performance was extended into the continent this morning – the Stoxx 600 and therefore the Dax 30 were up 0.73 percent and 1.04 percent respectively.
US markets were closed today for Labor Day.