- FTSE makes another strong showing, rising 1.70%
- Investors continue to put Monday’s decline behind them
- Next PLC the day’s top performer
5:00pm: FTSE rallies for a second straight day
The FTSE 100 closed higher Wednesday as investors extended Tuesday’s rally, bolstered by airlines and engineering stocks.
At the close, the UK blue-chip index increased 117 points, or 1.70%, to hit 6,998, just under the session high of 7,007.
“Tuesday’s rally has extended into a second day, and Monday’s sudden drop looks more and more like a sudden air pocket that produced excitement but little lasting impact,” noted Chris Beauchamp, chief market analyst at online trading group IG.
“At present it appears growth is being left behind, or at least technology stocks are, in part due to caution after Netflix’s results last night. European indices are sharply higher, recovering from a tough few sessions, If Monday does turn out to have been a sudden summer squall the strength of this current bull market will be reaffirmed once again, and will also bolster the ongoing parallels with 2013 and 2017, which both followed on the heels of volatile years but were themselves examples of quiet but relentless equity market rallies.”
4.15pm: Market's good mood continues as Monday blues are banished
Leading shares are clinging onto the 7000 level as investors shrug off the concerns about the Delta variant which dominated trading at the start of the week.
The FTSE 100 is up 120.33 points or 1.75% at 7001.46, having earlier touched 7007.
The FTSE 250 mid-cap index is also moving sharply higher, up 1.99% at 22,560.29.
But other stocks benefitting from the easing of restrictions - travel, hospitality and leisure - are also on the way up.
Michael Hewson, chief market analyst at CMC Markets UK, said: "Less than two days after Monday’s sharp falls, markets have undergone a complete and utter mood change. The concern that rising Delta infections will slow down the economic rebound, appears to have been replaced by optimism that today’s better than expected company reports speak to a consumer that is down but by no means out.
"That’s not to say Monday’s concerns have disappeared completely, but today’s trading updates appear to have had the effect of adding some calming balm, on some early week frayed nerves."
A strong performance so far on Wall Street is also helping, with the Dow Jones Industrial Average currently up 205 points or 0.59%.
3.43pm: Working from home warning if hospital admissions continue to rise
If COVID-19 related hospital admissions exceed expectations now everything has been thrown open again, scientific advisors are reportedly advising ministers to take early action to deal with this.
According to the i newspaper, this could mean the government acting in the first week of August to prevent the NHS being overwhelmed, just weeks after all restrictions were lifted.
At the peak of the third wave - expected at the end of next month - hospital admissions are forecast to reach between 1000 and 2000 a day. But with a figure of 745 a day in mid-July - before 'Freedom Day' - and admissions said to be doubling every three weeks, that could mean a peak of 3,000 by the end of August.
If this happens Sage is advising the return of some precautionary measures, such as mandatory face masks and encouraging people to work from home again.
This is likely to go down very badly with people fed up of any form of restrictions.
It would also be bad news for property companies, who are hoping to fill some of their empty office blocks, as well as transport companies who have already seen revenues plunge during previous lockdowns.
And with no office workers in city centres again, the revival in retail and restaurants could be short lived if some of their key sites are in the middle of a ghost town.
3.20pm: US markets give London new boost
And we're back above 7000 - just.
Buoyed by a strong start on Wall Street, where the Dow Jones Industrial Average is now up 259 points or 0.75%, the FTSE 100 has added 121.26 points or 1.76% to 7002.39.
Shrugging off Delta variant fears, aero-engine maker Rolls-Royce PLC (LON:RR.) has climbed 7.77% while British Airways owner International Consolidated Airlines is up 6.38%.
Meanwhile in the crazy world of crypto, Bitcoin has rebounded above the key US$30,000 threshold after dropping below it in the early hours of Tuesday morning.
In early afternoon trading in London on Wednesday, the digital currency was up 6.3% in the last 24 hours at US$31,604, its highest level since Monday morning.
2.44pm: Wall Street opens on the front foot
The main indices on Wall Street managed to open in the green on Wednesday as positive earnings lifted optimism among traders.
Shortly after the opening bell, the Dow Jones Industrial Average was up 0.41% at 34,655 while the S&P 500 climbed 0.34% to 4,337 and the Nasdaq rose 0.16% to 14,521.
Early winners of the session included Verizon, which rose 1.9% to US$56.63 after upgrading its guidance, and Coca Cola, which jumped 2.4% to US$57.16 after receiving a quarterly revenue bump.
Back in London, the FTSE 100 was continuing to move higher into late afternoon, rising 116 points to 6,997 at around 2.40pm.
2.05pm: Mining group climbs on disposal talk
Mining giant BHP PLC (LON:BHP) has climbed 2.33% to 2239p on reports it has put its oil and gas assets up for sale for between US$10bn to US$15bn.
Following the Bloomberg story, suggestions from Australia were that gas producer Woodside Petroleum was looking at buying some or all of the BHP operations.
Neither side would comment on the speculation.
The BHP share price move is helping to prop up the FTSE 100.
The leading index is now 110.74 points or 1.61% higher at 6991.87, having earlier reached 7002.
12.42pm: Company results buoy US investors
Wall Street is set to continue its rebound after Monday's rout, as investors put aside concerns about the Delta variant and concentrate on the positives for the economic recovery.
The Dow Jones Industrial Average is expected to open 157 points or 0.45% higher. The S&P 500, which on Tuesday saw its biggest one day gain since March, is set to rise 0.27% although the Nasdaq Composite is spoiling the party a little, forecast to fall 0.11%.
Ahead of the open Johnson & Johnson beat expectations with its second quarter results. Sales rose 27% while net earnings advanced 73.1%.
$JNJ | Johnson & Johnson Q221 Earnings:— LiveSquawk (@LiveSquawk) July 21, 2021
Revenue: USD23.31B (est USD22.54B)
Stelara Revenue: USD2.27B (est USD2.17B)
Adj EPS: USD2.48 (est USD2.29)
Increasing 2021 Year Guidance For Sales, EPS
Sees FY Adj EPS: USD9.60 To USD9.70 (saw: USD9.42 To USD9.57)
The Coca-Cola Company also reported a strong second quarter performance and raised its guidance for the full year.
Revenues rose 37% while earnings per share were up 48%. After its new zero sugar Coke launched in various parts of the world including Japan, Turkey and parts of Europe and saw 15% growth so far this year, it is now available in the US.
$KO | Coca-Cola Company Q221 Earnings:— LiveSquawk (@LiveSquawk) July 21, 2021
Organic Revenue: +37% (est +29.3%)
Revenue: USD10.1B (est USD9.28B)
Adj EPS: USD0.68 (est USD0.56)
Sees FY Organic Revenue: +12 To +14% (est +11.4%)
Raises FY Guidance
J&J's shares are up 1% in pre-market trading while Coca-Cola is 2% better.
As an indicator of the growing strength of the US economy, 60 S&P companies had reported results before today, and 85% of them had beaten analysts' forecasts.
Back in the UK and the FTSE 100 is off its best levels, now up 99.36 points or 1.44% at 6980.49.
11.34am: Home buyers rush to beat end of stamp duty holiday
More signs of the booming UK housing market, as buyers rushed to get their deals done before the stamp duty holiday grinds to a halt.
The latest HM Customs and Revenue figures show a record 213,120 transactions in June, a hefty 216.1% higher than the same time last year. The comparison of course is with a COVID-19 hit housing market so should be taken cautiously.
However last month's figure is also up 108.5% on the May number.
Iain McKenzie, chief executive officer of The Guild of Property Professionals, says: “More than 213,000 house sales were completed in June as buyers raced to beat the impending end of the stamp duty holiday - the highest number since the introduction of the statistics in April 2005.
“Much of last month’s rise is due to the last minute scramble to make the most of the stamp duty holiday, but the holiday hasn’t fully wound down yet and we could still see a boom in areas with housing priced under £250,000.
“Demand for houses still exceeds supply by a huge margin, with our estate agent members seeing some of the fewest properties available per branch in living memory.
“With such a scarcity of housing stock, and the continuing lower level of stamp duty holiday, there is no sign of prices slowing down any time soon.”
Housebuilders are higher after the figures (but then so is most of the market).
Overall the FTSE 100 is ahead 114.24 points or 1.66% at 6995.37.
11.14pm: Miners on the rise
Mining shares have shrugged off recent commodity price weakness as the market continues on its merrily positive way.
The FTSE 100 is 108.86 points or 1.58% at 6989.99, having briefly edged above the 7000 level to 7002.
Joshua Mahony, senior market analyst at IG, said: "Commodity prices are under pressure in the wake of a Chinese announcement that they will auction reserves of copper, aluminium, and zinc in a bid to quell price pressures.
"The rise in Chinese PPI highlights how input costs are driving up inflation, and bulls will hope that this alleviates some of the underlying reasons behind the recent rise in headline CPI.
"Recent months have been dominated by the Chinese efforts to calm the price of key commodities, and today’s announcement represents a intensification of those efforts.
"Nonetheless, with market in risk-on mode, there is a clear willingness to overlook short-term volatility in commodity prices to instead focus on the prospect of economic outperformance in the second half of 2021."
9.59am: Company results provide support as market continues to climb
Positive company results and a revival in shares likely to benefit from the reopening of the economy are helping to keep the market's momentum going.
The FTSE 100 is now up 108.55 points or 1.58% at 6989.68.
Russ Mould, investment director at AJ Bell, said: “Yesterday’s market rebound was welcome, but also raised questions as to whether it was a dead cat bounce. The fact markets have sustained positive momentum for a second day in a row is more encouraging.
“Helping to focus investors’ minds on stock opportunities and divert attention away from general worries about the economy and inflation is a step-up in companies reporting their latest earnings.
“There was also a sense that investors were regaining their appetite for higher risk stocks, with notable gains among airlines, transport operators and leisure companies.
“The FTSE 100 advanced...with retail and leisure the standout sectors helping to drive the index. Providing support were pharmaceutical and consumer goods stocks."
Apart from Next, other risers included catering group Compass PLC (LON:CPG), up 5.49%, Premier Inns owner Whitbread PLC (LON:WTB), 4.93% better, and Primark parent Associated British Foods PLC (LON:ABF), ahead by 3.93%.
Even on a good day there are usually some fallers. At the moment these include Royal Mail PLC (LON:RMG), down 1.51% after it said parcel deliveries slowed sharply in its latest quarter as the online boom sparked by the pandemic eased, though letter volumes continued to rise.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’With consumers no longer trapped in their homes with little option than to make purchases online, it was inevitable that the number of parcels sent through Royal Mail would slow.
"The 13% fall in parcel volumes compared to the first quarter of 2020 is a disappointment... But we’re not fully reverting to all our old shopping habits and the structural shift to e-commerce is going to keep posties busy with trolley loads of business."
9.04am: Sunny mood continues
The market's positivity continues, with the FTSE 100 now within sight of the 7000 level again.
The leading index is currently up 96.56 points or 1.4% to 6977.69, its high for the day so far.
Meanwhile the FTS 250 is also on good form, up 1.54% to 22,459.87.
Hard hit airlines are climbing as investors decide they were oversold on continuing travel restrictions. So British Airways owner International Consolidated Airlines PLC (LON:IAG) is up 5.17%.
Aero engine maker Rolls-Royce PLC (LON:RR.) was boosted on Tuesday by positive comments from Citigroup, and is now up another 5.65%.
The improvement in UK government finances is also helping sentiment, although there are some not-so-good signs in the figures.
Danni Hewson, AJ Bell financial analyst, said: “Government borrowing is going down and tax receipts are going up; that equation is proof if it were needed that the lifting of restrictions is powering the economy forward.
"But it’s not all good news, not by a long shot. Government spending actually increased by £2.5bn in June compared to the June 2020 with falling furlough costs offset by spending on vaccines and the test and trace programme as well as interest payments on the debt pile. That figure of £8.7bn, up by a whopping £6bn from the same month last year, is the highest since records began in April 1997."
8.22am: FTSE makes bright start
The FTSE 100 is in a sunny mood, boosted by a revival on Wall Street as it shakes off this week's renewed pandemic fears.
The leading index is up 52.97 points or 0.77% at 6934.10.
The rise comes after news of an improvement in the UK government finances as the economy continues to recover from the worst effects of the pandemic.
Borrowing fell from £23.6bn in May to £22.8bn in June.
This was £5.5bn less than in June 2020 but still the second highest level for the month since records began in 1993.
And it was slightly worse than the expected figure of £21.5bn.
With the reopening after the lockdown restrictions, companies were starting to earn money again and contribute to the government's coffers. So tax receipts in June came in at £62.2bn, up from £59.5bn in May.
It brought forward its trading statement from the planned date of 4 August after sales for the last eleven weeks were "materially" ahead of expectations.
So it has increased its profit guidance for the year by £30mln to £750mln, and has decided to repay £29mln of business rates relief to the government.
It cited several reasons for the improved performance.
There was pent-up demand for adult clothing, with many customers having made few summer purchases during the last 18 months.
The warm weather at the end of May and start of June helped, with growth slowing significantly once the very warm weather passed.
Fewer holidays overseas were likely to have increased domestic spending in the UK, while consumers also had money to burn having increased their savings with nothing to spend them on during lockdown.
6.36am: UK set to benefit from US rebound
The FTSE 100 is expected to open slightly higher on Wednesday as traders in London look to follow a strong performance in the US markets on Tuesday.
Spread-betters IG expect the blue-chip index to add around 12 points at the open after ending Tuesday’s session 37 points higher at 6,881.
Expectations of a positive open followed a strong performance on Wall Street overnight as traders in New York attempted a rebound from Monday’s rout.
The Dow Jones Industrial Average closed 1.62% higher at 34,511, while the S&P 500 was up 1.52% at 4,323 and the Nasdaq rose 1.57% to 14,498.
The picture was more mixed in Asia this morning, with Japan’s Nikkei 225 rising 0.4% while Hong Kong’s Hang Seng dropped 0.54%.
On currency markets, the pound was down 0.08% at US$1.361 against the dollar amid lingering jitters about the UK’s economic trajectory following reopening on Monday.
Around the markets:
Sterling: US$1.361, down 0.08%
Brent crude: US$68.94 a barrel, down 0.59%
Gold: US$1,808 an ounce, down 0.04%
Bitcoin: US$30,706, up 3.3%
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were mixed on Wednesday as Japan’s exports rose 48.6% in June as compared with a year earlier, according to official data.
That was higher than a 46.2% increase expected by analysts in a Reuters poll.
The Shanghai Composite in China rose 0.60% but Hong Kong’s Hang Seng index fell 0.37%
In Japan, the Nikkei 225 gained 0.56% while South Korea’s Kospi declined 0.40%.
Shares in Australia surged, with the S&P/ASX 200 trading 1.15% higher.