FTSE 100 climbs as ‘relief rally’ pushes global equities higher
The FTSE 100 has started the week off strong, climbing as much as 1.69 per cent amid a global “relief rally” as investors rushed to buy up shares in beaten-down sectors after last week’s sharp stock market sell-off.
Blue chips HSBC and spirits-maker Diageo helped boost the British blue-chip index on Monday, which was also buoyed by positive economic data from China.
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The FTSE 100 took its cue from Asian markets, which put in a strong performance overnight amid signs that China’s economic recovery was gaining momentum.
HSBC shares rebound after Ping An ups stake
The FTSE 100 index had risen 1.69 per cent to 5,941.64 by 3pm, while the FTSE 250 index was trading 1.93 per cent higher at 17,373.91.
British lender HSBC surged over ten per cent in early trading after Chinese finance giant Ping An, its biggest shareholder, boosted its stake in the lender to eight per cent.
Shares in the lender were up 8.15 per cent up by 3pm.
HSBC’s shares have taken a hammering in recent weeks, sinking to a 25-year low last week following allegations of money-laundering in the wake of the FinCEN files leak.
Worries over the impact of deteriorating US-China relations have also hit the lender’s share price, which is down almost 47 per cent so far this year.
Blue-chip drinks maker Diageo also powered the FTSE 100’s rise, climbing 5.89 per cent after issuing an update saying it had made a “good start” in the new financial year.
In an update ahead of its AGM, Diageo said its US business was performing ahead of expectations, adding that the firm’s outlook for the full-year had improved since it reported a 47 per cent profit drop in August.
‘Relief rally’ pushes global markets higher
Wall Street climbed after the open following the longest weekly losing streak in a year for the S&P 500 and the Dow, with banks and travel stocks boosted by investors keen to snap up shares at reduced prices.
The S&P 500 was 1.71 per cent higher by mid-afternoon UK time, while the Dow added 1.91 per cent. The tech-heavy Nasdaq climbed 1.54 per cent.
“We’re seeing a bit of a relief rally,” said Jonathan Bell, chief investment officer at Stanhope Capital. “Things got oversold perhaps a little bit in the short term.”
“We saw quite a lot of exuberance in July and August, with prices particularly of tech stocks rising and that then has come off a little bit recently,” he added.
European equities also climbed after falling sharply last week amid a resurgence of coronavirus cases, lifted by the positive performance of Asian markets.
In Germany, the DAX rose as much as 2.84 per cent, while France’s CAC 40 added 2.28 per cent.
Hong Kong’s Hang Seng index climbed 0.94 per cent on Monday, while Japan’s Nikkei 225 added 1.32 per cent. MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.51 per cent.
Sentiment in Asia was boosted by data that showed profits at China’s industrial firms grew for the fourth straight month in August, buoyed in part by a rebound in commodities prices and equipment manufacturing.
“A very strong start to markets sets the tone for an interesting week ahead, including Brexit trade talks and the first 2020 US Presidential debate,” said AJ Bell investment director Russ Mould.
Meanwhile, the UK government is mulling tougher restrictions in England to tackle a swiftly accelerating second wave of the novel coronavirus outbreak, possibly outlawing more inter-household socialising, a junior health minister said this morning.
Read more: London faces emergency two-week lockdown as coronavirus cases spike
“We don’t want to bring on new restrictions but of course we keep a constant eye on what is going on with the Covid rate,” Helen Whately told Sky News.
“We were looking at what we might be able to do,” she added.