FTSE 100 rises as investors look past tumbling oil prices
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The FTSE 100 has risen as investors look past the chaos in oil markets to signs that the coronavirus outbreak could be peaking and some surprisingly positive company results.
Britain’s FTSE 100 stock index closed up 2.3 per cent this afternoon, at 5770.63. It had fallen around three per cent yesterday.
European stocks were also higher. The pan-European Stoxx 600 was up 1.8 per cent. Germany’s Dax was 1.61 per cent higher while France’s CAC 40 was up 1.25 per cent. All had fallen considerably yesterday.
Stability showed no signs of returning to the oil markets, however. Brent crude oil, the international benchmark, fell as much as 13 per cent before rebounding to $20.61 per barrel, putting it more than six per cent up.
WTI crude, the US benchmark, was also up at $14.41 per barrel. It traded at $60 per barrel in January.
The price for the May WTI crude contract on Monday tumbled into negative territory for the first time due to a combination of market quirks and the coronavirus-driven slump in demand.
“After big slides yesterday caused by the turmoil in oil markets, things look a little brighter on Wednesday,” said Jasper Lawler, head of research at London Capital Group.
Lawler said that markets were not too worried about plunging oil prices because they believe its long-term value is higher than prices currently indicate.
However, Mark Haefele, chief investment officer at UBS Global Wealth Management, said he expected plunging oil prices to “contribute to volatility in equity, fixed income, and foreign exchange markets”.
Yet he also said that “the recent period of extreme dislocation in the oil US market should pass in the second half of the year”.
Investors move out of dollar
In a sign that investors were feeling more confident this morning, the pound rose against the dollar 0.5 per cent to $1.236.
The dollar was down on an index roughly 0.3 per cent, showing that people are moving out of the safe-haven asset to put their money elsewhere.
Asian stocks were mixed overnight. Hong Kong’s Hang Seng was last up 0.4 per cent and China’s Shanghai composite was 0.6 per cent higher. But Japan’s Nikkei slipped 0.7 per cent.
US stocks are set to open higher after two days of falls, according to futures prices.
The FTSE 100 was supported today after scientists suggested the UK’s coronavirus outbreak could be passing its peak.
Medical professors from Cambridge and Oxford universities told the BBC that they thought cases had peaked, although they warned it could be a long time before they dropped meaningfully.
Company results boost FTSE 100
FTSE 100 investors were also boosted by some better-than-expected corporate results. Irish building group led the charge with a 6.6 per cent share jump. It said stimulus measures would likely support business and pledged to pay its 2019 dividend.
Industrial stocks such as equipment rental firm Ashtead and mining groups Polymetal International and Fresnillo benefitted from signs that the virus could be peaking.
A new $480bn (£390bn) fiscal stimulus package in the US to support businesses also cheered investors. Joshua Mahony, senior market analyst at IG, said the package is “unlikely to be the last”.
He said President Donald Trump has “shown his willingness to ramp up debt in the name of economic growth”.