FTSE 100 closes above 7,000 for first time since Covid crash

The FTSE 100 has closed above 7,000 for the primary time for the reason that Covid-19 pandemic triggered a collapse in world markets final yr, pushed by rising hopes for the world economic system after document development in China.

The index of main UK firm shares ended the day up 36 factors on Friday, or 0.5%, at 7,019, the very best degree since late February 2020 when the primary wave of Covid-19 despatched shock waves by monetary markets all over the world.

On a day of rising optimism amongst monetary traders, the Dow Jones industrial common closed up 0.5% at one other document excessive of 34,201 factors helped by a 19.4% rise in new housing begins within the US. The S&P500 additionally closed at a brand new document of 4,185.47 factors.

In Europe, Germany’s DAX 30 index closed up 1.3% and France’s CAC 40 gained 0.9%.

The domestically targeted FTSE 250 index of UK firm shares hit a document excessive, ending the day up 0.2% at 22,522, boosted by journey and leisure shares amid hopes for a growth in shopper spending as lockdown measures are relaxed.

The recent momentum got here as China’s economic system continued its restoration from the pandemic with document development of 18.3% within the first quarter of 2021, in line with official figures. Buoyed by rising manufacturing unit output, analysts mentioned the figures demonstrated the prospects for a stronger restoration on the earth economic system and rising demand for uncooked supplies.

Mining corporations and oil producers had been in demand on the FTSE 100. Evraz, the pure assets agency, was the largest riser on Friday, ending the day up virtually 4%, whereas shares in banks additionally rallied.

The restoration within the FTSE 100 comes towards a backdrop of accelerating development on the earth economic system, fuelled by the coronavirus vaccine programme and the easing of restrictions in a number of giant economies.

Retailers standing to profit from an increase in shopper spending after lockdown rose on the FTSE 100, together with Tesco and Subsequent. Shares in journey and tourism corporations additionally gained on the FTSE 250, with the airline easyJet up by 0.5% and the vacation agency Tui gaining by the same quantity. WH Smith, which runs outlets at airports and railway stations, completed the day up 1.5%.

Though having damaged the psychologically vital 7,000 barrier, the FTSE 100 stays greater than 500 factors beneath its degree at the beginning of final yr and has lagged behind a number of different huge markets, together with the Dow Jones and Japan’s Nikkei.

The London market has extra mining corporations and oil corporations which have suffered from weaker world demand through the Covid disaster till now, and fewer huge expertise corporations which have ridden the wave of an funding growth.

Steve Clayton, a fund supervisor on the stockbroker Hargreaves Lansdown, mentioned: “The UK market has been one thing of a laggard, in comparison with worldwide markets on either side of the Atlantic.

“However as we speak the FTSE100 has handed an enormous milestone, rising by 7,000 for the primary time for the reason that pandemic despatched it tumbling a yr in the past. Investor confidence in financial restoration is rising as governments roll out stimulus packages and enterprise confidence surveys are hitting highs.”

Analysts mentioned proof of sturdy world development within the US and China was propelling inventory markets greater, with hopes that the vaccine programme would hold a lid on an infection charges and permit a sooner return to relative normality.

Nevertheless, rising infections and renewed lockdown measures would quickly curtail progress. There are additionally issues over renewed geopolitical tensions because the US imposes sanctions on Russia, and fears that sooner financial development may set off a bout of inflationary strain, resulting in greater central financial institution rates of interest placing a brake on development.

The restoration in world markets got here after China reported sturdy development throughout all sectors. In March the nation’s industrial output rose 14.1% yr on yr, bringing first-quarter development to 24.5%, the official knowledge confirmed. Retail gross sales surged 33.9% within the three months.

China’s was the one main economic system to develop in any respect in 2020, supported by industrial exercise and better-than-expected exports because the virus hit markets all over the world.

Whereas coronavirus first emerged in central China in late 2019, the nation was additionally the quickest to bounce again after authorities imposed strict management measures and customers stayed at house.