FTSE 100 jumps amid strong earnings but US stocks mixed
The FTSE 100 jumped on the final day of a tough week for markets, as investors found some optimism in company earnings, but US stocks were more mixed.
The UK’s main stock index was boosted by upbeat results from lender Barclays (BARC). New stimulus measures from chancellor Rishi Sunak yesterday also helped stocks.
Read more: Rishi Sunak extends support to businesses facing Tier 2 restrictions
US authorities’ approval of Gilead’s drug Remdesivir for coronavirus treatment also boosted sentiment, analysts said.
The FTSE rose 1.4 per cent to stand at 5,870 points by mid-afternoon. It eked out a small gain yesterday but is set to finish the week lower.
Rising coronavirus cases across Europe have weighed on markets in recent weeks. Governments have put in place new restrictions, raising fears that the fragile economic recovery will stall.
Nonetheless, Germany’s Dax index rose 1.1 per cent after a difficult few days. France’s CAC 40 was up 1.5 per cent and the Europe-wide Stoxx 600 was 0.9 per cent higher.
Carmakers rose after German firm Daimler increased its profit forecast and Renault also beat revenue estimates. Survey data showed the Eurozone’s manufacturing sector was faring much better than services.
In the US, the tech-heavy Nasdaq slipped in early trading. But the S&P 500 and Dow Jones both rose.
Barclays and retail sales help FTSE 100
Barclays this morning beat expectations for third-quarter profit. Its shares jumped 7.1 per cent, pushing up the FTSE 100 and other banks.
The lender posted pre-tax profit of £1.1bn, double the £507m analysts had been expecting.
Much lower provisions for bad debts helped its results. Barclays set aside £608m in the third quarter, far less than the £3.7bn to cover bad loans in the first half.
On the economics front, a jump in UK retail sales – they grew 1.5 per cent in September – was swiftly counted by a downbeat survey for October. It showed that growth is slowing as new restrictions are put in place.
Nonetheless, the FTSE looked past the gloom to rise solidly.
Read more: UK retail sales smash expectations but analysts flag trouble ahead
Fiona Cincotta, market analyst at City Index, said markets liked the “stronger than forecast results from Barclays, which bode well for the sector as a whole”.
Fawad Razaqzada, market analyst at Thinkmarkets, said: “Banks have been a bright spot this earnings season despite the recent central bank interest rate cuts.”
US stocks hang on stimulus talks
The S&P 500 was up 0.2 per cent and the Dow Jones climbed 0.1 per cent in early trading. The Nasdaq slipped 0.1 per cent, however.
US investors were digesting last night’s US presidential election debate, which was a more tame affair than the first outing.
The long running saga over the next round of fiscal stimulus continues. Noises from the Democrats have been much more upbeat than those from Republicans.
Read more:Boris Johnson tries to court Biden as Number 10 falls off Trump train
Razaqzada said: “It is getting quite boring now, but unfortunately speculation over US fiscal stimulus continues to dominate investor sentiment even as virus cases continue to spiral out of control.
“In recent days, optimism has risen that a deal might be on the cards after all.”