Fresh economic hopes fuel the FTSE’s late rally
UK EQUITIES rallied firmly into the close yesterday as bullish economic data both here and in the US calmed fears that the global economy may not be ready for a wind down in stimulus.
The FTSE 100 closed up 62.43 points or one per cent at 6,634.36, its highest close since 30 May, while Wall Street’s Dow registered a new historical intraday high during London trading hours.
The catalyst for the late gains was the improved US weekly jobless claims data and an above-forecast reading on business sentiment in the US Mid-Atlantic region.
That helped power UK stocks, which continue to recover from mid-June lows triggered by worries a slowdown in stimulus in the U.S. would derail the global economic recovery.
“At the moment, over exuberance springs to mind with the FTSE 100 on the right side of the 6,600 level and the Dow in virgin territory,” TradeNext strategist Ronnie Chopra said.
“However, for tapering to be delayed obviously we need bad data but at the moment both bad and good data seems to push the equity markets higher,” he said.
Consumer-focused stocks such as general retailers and the travel and leisure sector each rose 1.8 per cent after retail sales increased 0.2 per cent on the month and 2.2 per cent on the year, adding to signs of a recovery in the British economy.
Optimism among consumers appeared to be spreading to equity investors with the London Stock Exchange, up 7.4 per cent, after first quarter revenues beat forecasts.
The world’s biggest advertising agency, FTSE heavyweight WPP, gained 3.6 per cent. Traders said the share benefited from news French peer Publicis was targeting the top end of organic growth forecasts.
In the very early stages of the European quarterly earnings season, 61 per cent of companies have beaten expectations, by an average of 4.2 per cent.
Low-cost airline EasyJet climbed 4.1 per cent, the second top riser on FTSE 100, after an upgrade by JP Morgan, which said it favoured discount airlines over more established names on profitability grounds.
Meanwhile through the continent, the Eurostoxx 50 rose 1.4 per cent to 2,717.99 points, breaking above technical resistance around the 50 and 60-day moving averages to post its highest finish since 10 June.