Markets remain hopeful as Bank of England comments help boost optimism

Following a wobble on Tuesday, the bulls were back out in force as optimism swept markets, building on strong growth from earlier in the week.

Soothing words from Bank of England governor Andrew Bailey to MPs, following similar moves from US Fed chair Jerome Powell on Tuesday, also helped.

The FTSE 100 closed the day up 64.93 points, or 1.08%, to 6,067.16 – reversing the losses made on Tuesday.

In Europe, the German Dax 30 closed up 1.3% and France’s Cac 40 up 0.9%.

David Madden, financial analyst at CMC Markets UK, explained: “As governments slowly unwind their lockdown restrictions, that should equate to an increase in economic activity.

“In recent weeks we have broadly seen an improvement in economic indicators from countries that have reopened elements of their economies, and dealers are hopeful the trend will continue.

“On Monday, global stocks were given an extra lift when Moderna said the first phase of their trials for a potential Covid-19 vaccine were positive. Since then, there have been questions over whether the study provided enough information, so some of the optimism surrounding that topic has faded.”

Andrew Bailey
Andrew Bailey spoke to MPs on Wednesday (Tolga Akmen/PA)

And on the economic front, Mr Bailey told the Treasury Select Committee it would be “foolish” to rule out cutting interest rates below zero and confirmed policymakers are actively reviewing the Bank’s options to help see the economy through coronavirus.

Connor Campbell, analyst at Spreadex, said: “The fact Bank of England chair Andrew Bailey refused to rule out negative interest rates – like Fed head Jerome Powell appeared to – likely aided the FTSE and hurt the pound.”

The pound was flat by market close, having recovered from earlier in the day, at 1.225 dollars. Against the euro a pound was down 0.5% at 1.116 euros – falling on the back of decent consumer confidence data from the Eurozone.

In company news, Rolls Royce announced plans to cut at least 9,000 jobs amid the continuing coronavirus crisis, with UK factories set to be hardest hit.

The Derby-based company announced a major reorganisation of its business as demand for aircraft, and the engines it manufactures, slumps across the world.

Investors were pleased with the news that the company’s future was secure, sending shares up 6.1p to 273.7p.

Marks and Spencer wowed investors with a thorough plan on how it intends to recover, including longer-term plans to cut back on the committees and layers of management that have slowed the business down in the past.

Bosses still plan to shut 100 to 120 stores in the UK and it is working flat out to get its online joint venture with Ocado up and running by September.

Shares closed up 9.24p or 10.8%, at 95.04p.

Credit-check business Experian saw its shares jump 186p, or 7.38%, to 2,708p as bosses revealed an 8% boost in sales, with operating profits of 1.19 billion dollars (£970 million).

Traders were particularly happy that the dividend was held, rather than scrapped like other listed firms during the coronavirus crisis.

William Hill may be in line for a windfall of up to £150 million, bosses revealed on Wednesday after betting firms won a case against the taxman. Shares closed up 4p at 126p.

And a class action lawsuit against Aviva sent shares down 0.5p at 239p, as policyholders revealed they are taking the firm and rival QBE to court over policies not paid out over the coronavirus crisis. A similar suit was launched against Hiscox earlier in the week.

The biggest risers on the FTSE 100 were Experian, up 186p to 2,708p, DCC, up 368p to 6,488p, Ashtead Group, up 90p to 2,351p, Rightmove, up 20p to 523.2p, and United Utilities, up 28.6p to 923.6p.

The biggest fallers on the FTSE 100 were Taylor Wimpey, down 7p to 138.3p, Berkeley Group , down 196p to 3,902p, Land Securities, down 25.2p to 537p, Barratt Developments, down 19.4p to 484p, and Carnival, down 37.5p to 964p.

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