US stocks open higher as Wall Street eyes more records

Wall Street opened higher on Wednesday and looks to be heading for another day of new all-time records.

The S&P 500 closed at an all-time high yesterday after recovering all of the losses suffered during the coronavirus crash and was up once again on Wednesday morning by a further 0.28 per cent to 3,399 points.

The Nasdaq followed suit after setting its own record high yesterday and was also up 0.25 per cent in New York this morning, climbing to 11,238 points.

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The Dow Jones was up 0.33 per cent to 27,870 points.

The FTSE 100 rose in afternoon trading as optimism in US stock markets rubbed off on Europe despite residual worries over US-China tensions and coronavirus.

The UK’s main stock index rose 0.63 per cent to 6,114 points, having reversed course after falling in the morning. The FTSE 250 of smaller firms dropped 0.22 per cent, however.

In Europe, Germany’s Dax rose 0.71 per cent and France’s CAC 40 climbed 0.79 per cent. The pan-European Stoxx 600 gained 0.62 per cent.

Trillions of dollars worth of fiscal and monetary stimulus have buoyed markets. But they have widened the disconnect between the stock markets and the real economy, which is suffering its worst year in recent history.

FTSE 100 boosted by BA and Primark

London’s blue-chip FTSE 100 index was boosted by British Airways-owner IAG. It climbed 2.3 per cent as it recovered from a slump on Monday amid worries about global tourism.

There were signs that better-than-expected inflation data boosted the FTSE 100. Packaging firm DS Smith climbed 2.1 per cent, the second biggest riser. Supermarket Morrison’s rose 1.5 per cent and Primark’s owner Associated British Foods also rose.

Price inflation came in at one per cent in July, up from 0.6 per cent in June, the Office for National Statistics (ONS) said today. It was better than the 0.6 per cent predicted by analysts.

However, Ruth Gregory, senior UK economist at consultancy Capital Economics, said the figures are “unlikely to mark the start of an upward trend”. She said discount schemes from the government would put pressure on prices.

US stocks eye another all-time high

The benchmark S&P 500 index rose 0.2 per cent yesterday, setting a closing record of 3,390 points and was on course to set a new high after a bullish start to trading.

The Nasdaq, which also set a closing record yesterday, was in the green as well.

The record-breaking highs have topped off a remarkable rise in US stocks over the last few months. European markets, in particular the FTSE 100 which is exposed to energy firms and banks, have fared much less well.

The rally has been powered by the big US tech firms – such as Apple, Amazon, Facebook, Google and Netflix – which have done well from coronavirus lockdowns.

Edward Moya, senior market analyst at currency firm Oanda, said US stock futures edged higher after retail giant Target “hit the ball out of the park” as it reported an 80 per cent second-quarter profit jump today. 

Yet he said that “Wall Street could see light volumes until the release of the Fed’s minutes” later today. Investors are looking for signs of more stimulus and information on inflation.

Coronavirus and US-China tensions weigh on FTSE 100

Investors remained worried about US-China tensions. China’s CSI 300 index dropped 1.5 per cent after US President Donald Trump said he had cancelled last weekend’s round of trade talks with Beijing.

“I canceled talks with China,” Trump said at a speech in Arizona. “I don’t want to talk to China right now.”

Tensions have risen sharply since the start of the coronavirus pandemic. Investors fear Trump will ramp up the rhetoric as the November presidential election approaches, which could lead to a new trade war and derail the global economic recovery.

Rising coronavirus cases in various countries around the world also weighed on investors’ minds. Ireland is tightening restrictions on some gatherings and New Zealand is dealing with a new outbreak.