FTSE 100 Index rebounds after global stock sell-off
UK stocks broke their losing streak on Wednesday.
London’s blue chip index started to bounce back from a major sell-off that wiped trillions of pounds off global markets this week in response to fears that rising inflation could spark interest rate hikes.
The FTSE 100 Index ended the day up 1.93% or 138.02 points at 7,279.42 points, breaking its losing streak and helping it recover from a plunge on Tuesday when blue chip stocks saw nearly £50 billion lopped off their value.
Indexes across Europe posted gains, with Germany’s Dax up around 1.9% and the Cac 40 in France lifting by 1.7%.
Across Asia, Tokyo’s Nikkei 225 Day closed 0.16% higher, though the Hang Seng Index in Hong Kong remained down by 0.89%.
Markets were taking their cues from across the Atlantic after Wall Street swung back into the black in overnight trading and continued to push higher after markets opened on Wednesday.
The global equity sell-off had been building since last Friday when traders became spooked by the prospect of tighter monetary policy after the US posted strong average earnings data.
Despite rising share prices, investors seemed to be taking a more cautious approach.
David Madden, a market analyst at CMC Markets UK, said: “Equities are in recovery mode today after enduring a turbulent week. A combination of shorting covering and bargain hunting is helping the markets today.
“It has been a brutal week for investors, but some are keen to step in and take advantage of the fall in prices. There is still a sense we could be in for another leg lower, and for that reason some dealers are reluctant to get back into the market.”
On the currency markets, the pound took a tumble against a stronger US dollar to trade at 1.388, but rose 0.3% versus the euro to 1.130.
Brent crude prices were down nearly 2% at 65.88 US dollars per barrel, as investors reacted to the latest data from the Energy Information Administration (EIA) which showed a higher than expected rise in gasoline inventories – reviving fears over a global energy glut.
In blue chip stocks, pharma firm GlaxoSmithKline jumped 42.6p to 1,285.4p after reporting rising full-year sales and profits, and pointing to a pipeline of new products that will help its performance in 2018 – including those to treat lung conditions and shingles.
Tesco rose 2.6p to 202.5p despite the supermarket being faced with an equal pay case by women who claim they are being paid less than men for work of equal value.
Lawyers estimate that the company could be faced with a bill of around £4 billion as a result.
Imperial Brands climbed 30.5p to 2,760p as the tobacco giant assured that annual earnings were still on track despite a first-half hit from the collapse of UK wholesaler Palmer & Harvey, the rising pound and tighter regulation.
Away from the top tier, the FTSE 250 Index rose 429.09 points to 19,691.65 points, helped by a surge in Redrow stocks that ended the day up 32p at 625.5p after the group chalked up a 26% rise in half-year pre-tax profits to a record £176 million, on the back of higher selling prices and a jump in completions.
Shares in utility giant Severn Trent rose 54.5p to 1,870.5p as Britain’s biggest listed water company reported a 12% drop in water quality complaints, despite seeing more supply interruptions than usual.
It is now on track to pocket at least £50 million in outperformance payments from water regulator Ofwat.
The biggest risers on the FTSE 100 were Scottish Mortgage Investment Trust up 27.8p at 450p, Old Mutual up 12.1p at 234.8p, 3I Group up 40p at 935.6p, and ITV up 6.75p at 167.45p.
The biggest fallers on the FTSE 100 were Randgold Resources down 244p at 6,214p, Fresnillo down 35.5p at 1,249.5p, Antofagasta down 13.2p at 899.4p, and Smurfit Kappa Group down 6p at 2,444p.