Traders turn bullish on Brexit and interest rates hopes

Tougher coronavirus restriction rules brought in on Monday failed to temper the excitement on the stock market with traders pushing prices up.

Instead, the London Stock Exchange’s FTSE 100 leading index of shares closed the day up 85.26 points, or 1.5%, at 5,927.93.

European counterparts the German Dax and French Cac enjoyed boosts of 3.2% and 2.4% respectively.

The pound also had a solid day, rising 0.91% to 1.286 dollars and up 0.69% against the euro with a pound worth 1.103 euros.

Hopes for a positive outcome in the next round of Brexit talks on Tuesday and new comments from the Bank of England over potential negative interest rates both helped the currency.

Sebastien Clements, currency analyst at international payments company OFX, said: “The pound soared through the 1.28 handle against the US dollar on Monday morning as Bank of England deputy governor, Dave Ramsden, palmed off talks of UK negative interest rates in the short term.

“Governor Andrew Bailey has flirted with the notion of negative rates on multiple occasions, which has become one of the main talking points at the last few Bank of England policy meets.”

The deputy governor said he believes 0.1% is the optimal interest rate for the UK right now, rather than a negative one, which economists believe would trigger consumer spending and boost the economy.

David Madden, market analyst at CMC Markets, was more cautious.

He said: “Traders are clearly content to buy back into the market in light of the losses that were posted last week, but the bullish move seems excessive when you consider the uncertainty in relation to the UK-EU trades talks, the lack of a stimulus package in the US, and the health woes.”

In company news, it was a stellar day for HSBC following a week of pressure after the publication of leaked documents which fuelled money laundering concerns.

Shares in the bank closed up 25.2p at 308.55p as its largest shareholder, China’s Ping An Asset Management, increased its stake from 7.95% to 8%.

Suggestions were made that this was a sign of support for the bank by the Chinese government at a time when US-China relations remain strained, although others said it was a financial move, rather than political.

US casino owner Caesars said it was in advanced discussions to buy UK-based bookie William Hill for around £2.9 billion.

The US firm, which is hoping to use William Hill’s expertise as gambling laws loosen Stateside, offered 272p a share.

But because investors had already got wind of the deal last Friday, shares closed down from 312.2p to 275.9p, a fall of 12%, as the actual offer price came in below what the market had hoped for.

Spirits giant Diageo saw its shares close up 153.5p, or 6.1%, at 2,675p as bosses lifted trading forecasts after strong sales in the US drove a “good start” to the current financial year.

The Johnnie Walker and Guinness owner said it has been buoyed by “robust demand” in the off-trade, which covers supermarkets and retail stores, despite the continuing impact of the coronavirus pandemic.

The biggest risers on the FTSE 100 were HSBC, up 25.2p to 308.55p, Land Securities, up 38.5p to 528.9p, NatWest, up 7.68p to 107.3p, Lloyds, up 1.875p to 26.595p, and Standard Chartered, up 25.2p to 362p.

The biggest fallers on the FTSE 100 were Rolls-Royce, down 5.5p to 149.25p, GVC, down 23p to 975.4p, Flutter, down 255p to 12425p, Glencore, down 2.8p to 164.58p, and Polymetal, down 26.5p to 1651p.