Monday 26 February: The FTSE immediately began to make up further ground after the correction earlier in the month today. The move followed Asia’s strong trading session in the early hours and Wall Street’s strong close on Friday. The Nikkei closed +1.19%, and the Hang Seng closed +0.74%. Throughout the day shares in London managed to retain momentum, with the FTSE 100 crossing the 7,300 mark before slipping to close at 7289.58 (+0.62%).
The move was again primarily fuelled from a strong close on Wall Street last week and the good start in Asia this morning, as investor optimism runs high. Today was also helped by a lack of meaningful economic data to derail confidence. The pound also had a good start to the week after hawkish comments from Dave Ramsden over the weekend, who was one of the two policymakers back in November to vote against a rate hike. Although it managed to break the important $1.40 mark, the pound did retreat as the US markets opened and currently sits flat against the dollar, back below the $1.40 line.
In the context of the week, it is a relatively quiet start, with one of the biggest events coming in the form of new Fed Chair Powell’s inaugural testimony. It isn’t expected to yield any new rhetoric, although it will be closely watched nevertheless. On Thursday, investors will have to digest Powell’s comments alongside US inflation figures (preferred Fed inflation series). There is also a host of European PMI readings to come, with Germany amongst those tomorrow. Looking a little further ahead the result of Italian elections will happen on Sunday, which will likely give European investors something to ponder going into the weekend, because as we all know, no vote is a sure thing.
There wasn’t a huge amount of company news to digest first thing. Primark’s owner Associated British Foods did release first half results though, in which they revealed that profit was expected to grow this year, despite a few headwinds. Primark sales were hit by the classic ‘unseasonably warm weather’ (these results don’t account for this week clearly), but a weaker dollar should accelerate profit growth for the second half. Overall they’re expecting growth in all business divisions but Sugar. Sugar production quotas were abolished in October last year, which has caused price weakness but AB Foods are the most profitable and efficient sugar producer in the EU, and therefore are placed well to emerge strong. Shares closed the day one off the top spot on the FTSE, up 3.06% behind Anglo American shares (+3.09%). Miners enjoyed a good day after metal prices crept higher following an increase in Chinese imports. As European investors halted their trading for the day, US shares continued the global equity rally, with the Dow almost up 1% early into Monday’s session. The S&P and NASDAQ are also up by around 0.6%.