FTSE 100 and US stocks tentatively climb after rough week
The FTSE 100 headed towards the end of the week slightly higher and US stocks recovered some ground after another sell-off yesterday.
London’s blue-chip index was up 0.2 per cent at 6,015 points in afternoon trading as official data showed the UK economy grew seven per cent in July. The FTSE 250 of mid-cap firms also rose 0.2 per cent.
Read more: UK economy grows 6.6 per cent in July as recovery continues
On Wall Street, the S&P 500 rose 0.4 per cent after falling yesterday and the Dow Jones was up 0.5 per cent. The tech-heavy Nasdaq edged higher but was on track for its worst week since the stock markets crashed in March.
Stock markets fell in Europe amid concerns about rising coronavirus cases. Germany’s Dax was down 0.4 per cent, and France’s CAC 40 fell 0.2. The continent-wide Stoxx 600 was down 0.1 per cent.
Volatility has returned to markets in the last two weeks. Big US tech stocks have fallen sharply, after uncertainty set in about Wall Street’s recent blockbuster rise.
US markets had another rough day yesterday, opening higher but closing firmly in the red. The tech-heavy Nasdaq index shed two per cent while the S&P 500 lost 1.8 per cent.
Read more: ECB leaves interest rates on hold as it monitors recovery
Trading in Europe was subdued as investors digested the European Central Bank’s latest decision. It chose to hold interest rates at record low levels and maintain the current size of the coronavirus bond-buying programme. Many analysts had expected a more dovish line from the central bank.
FTSE 100 and pound rise together
The FTSE 100 has also had a choppy week, but has held up better than some indices thanks to the pound falling amid Brexit tensions. A lower pound makes the overseas earnings of the multinational firms that make up the index worth more.
Sterling was down 0.1 per cent at $1.279 this afternoon, however, as it continued to trade at around three-month lows.
Official figures showed that the UK economy grew by 6.6 per cent in July. Yet output was still well below pre-coronavirus levels.
“The pound is on the back foot yet again, with a UK-Japan trade deal failing to lift spirits in a week dominated by Brexit anxiety,” said Joshua Mahony, senior market analyst at trading platform IG.
Read more: Brexit: EU intensifying no-deal preparations after latest negotiating round
“FTSE traders continue to follow the pound today, with bulls hoping that we see further FX devaluation to the benefit of internationally-earnings firms.”
Multinationals Anglo American, Burberry, Glencore and Rio Tinto all did well, benefitting from the lower pound.
US stocks rise after torrid week
Investors on Wall Street regained their composure and bid up stocks in early trading. Nonetheless, the Nasdaq – dominated by big tech firms – was on track to lose more than three per cent this week.
The US big tech sell-off that began last week gathered pace on Tuesday as traders returned from the Labor Day weekend.
The Nasdaq sank 4.1 per cent in a day. The S&P 500 tumbled 2.8 per cent and the Dow Jones fell 2.3 per cent. Elon Musk’s Tesla took the biggest battering, dropping 22 per cent.
“It seems the stock market rollercoaster ride is flattening off its first major dip, but that sinking feeling in your stomach is far from over,” said Edward Moya, senior market analyst at currency firm Oanda.
“Investors are likely turning their attention to next week’s Fed meeting,” he said. “Throughout the pandemic [the US Federal Reserve] has offered consistent support for the economy and risky assets.
“The upcoming meeting could reveal some hints as to what needs to happen before policymakers are ready to raise rates.”