FTSE 100 closes higher and US stocks rise despite fresh coronavirus lockdowns
The FTSE 100 rebounded strongly from a terrible last week and US stocks jumped as investors rediscovered some optimism ahead of the US election and key central bank meetings.
London’s main stock index was 1.4 per cent higher at 5,654 points by the close of trade, despite the imposition of a new national lockdown.
The more domestically-focussed FTSE 250 index dipped 0.2 per cent, however.
On Wall Street, US stocks are trading stronger after the worst week for global markets since March.
The S&P 500 was up 1.3 per cent and the Dow Jones had climbed 1.6 per cent. The technology focused Nasdaq was 0.4 per cent higher.
“It’s perhaps surprising that we’re seeing the kind of moves we are, given what’s to come,” said Craig Erlam, senior market analyst at Oanda.
“But these markets have factored in a lot of negative developments over the last few weeks. So in the grand scheme of things, these moves are pretty negligible.”
The big event this week is the 3 November presidential election. Democrat Joe Biden is well ahead in the polls, making him likely to take the presidency from Donald Trump.
However, Trump also trailed four years ago. Investors are nervy about what has already been a chaotic election.
The rise in the FTSE 100 came despite Prime Minister Boris Johnson announcing a new national lockdown for England over the weekend.
Cheaper pound helps FTSE 100
“The UK’s stock market seems to be taking the imposition of a second lockdown in England pretty calmly,” said AJ Bell investment director Russ Mould.
Yet he pointed out that “the bulk of the FTSE 100’s earnings coming from overseas”. Sterling fell 0.4 per cent to $1.29 today, helping push up firms’ earnings from abroad in relative terms.
Domestically focused firms that may benefit from another lockdown rose on the index. Supermarkets Ocado, Tesco and Sainsbury’s were notable climbers. Takeaway firm Just Eat also rose.
However, travel stocks suffered amid fresh lockdowns in Europe.
Joshua Mahony, senior market analyst at IG, said: “With the government stating that travel is advised against, the declines seen for both national bus travel and international air travel stocks reflect the fact that most journey will have to be cancelled until these restrictions are lifted.”
Despite a likely drop in travel, oil prices recovered from an earlier fall. The benchmark Brent crude price was up 1.3 per cent to $38.40 per barrel.