FTSE rises as US stimulus hopes offset poor economic growth projections

PA City Staff

The London markets made gains as positivity surrounding financial stimulus in the US helped the FTSE to shake off gloomy economic forecasts.

Think tank the National Institute of Economic and Social Research (NIESR) slashed its economic growth projections due to the second wave of Covid-19 in the UK.

It warned the economy is set to grow 3.4% in 2021, having previously predicted a 5.9% rebound, although this was not enough to heavily impact London-based stocks.

The FTSE 100 closed 34.2 points, or 0.53%, higher at 6,523.53 at the close of play on Monday.

Connor Campbell, financial analyst at Spreadex, said: “A record-breaking start from the Dow Jones juiced up the European indices, despite the rising number of Covid-19 variants around the globe.

“The same thing that has been driving the Dow higher for months now was behind Monday’s rally.

“With the Democrats putting in place the framework to go their own way and pass Joe Biden’s 1.9 trillion-dollar American Rescue Plan regardless of whether or not Republicans are on board, the implementation of the stimulus package is getting closer and closer.

“Even the FTSE – which is sitting under the cloud of NIESR’s latest forecasts for the UK economy – got in on the action.”

Elsewhere in Europe, the Dax rose to an all-time high before slightly tempering while France’s biggest index marched to its highest for a month.

The German Dax was 0.21% higher and the French Cac moved 0.47% higher.

Meanwhile, sterling was robust against a weaker dollar as US traders focused on equity stocks.

The pound increased by 0.17% versus the US dollar to 1.373 and was up 0.09% against the euro at 1.140.

In company news, Boohoo shares dropped after it bought Dorothy Perkins, Wallis and Burton from Arcadia administrators for £25.2 million.

The deal is for the inventory, e-commerce and digital assets of the businesses and will save around 260 jobs.

However, investors were largely unimpressed, with shares sliding 17.4p to 347.5p.

Elsewhere in retail, Frasers Group nudged lower after Mike Ashley’s retail business confirmed it sold its almost-25% stake in French Connection amid takeover interest for the brand.

Frasers closed the session down 9p at 468.6p.

Bahamas Petroleum Company shed two-thirds of its value after the AIM-listed company told investors that an oil well off the coast of Bahamas, which it waited a decade to drill, had not found “commercial levels” of oil. It fell 1.39p to 0.67p.

BP was one of the FTSE’s top performers, with shares rising after it secured the rights to build new wind farms in UK waters. Its shares finished the day 9.9p higher at 261.95p.

The price of oil rose past 60 dollars for the first time in a year, as energy traders joined in with the improvement in sentiment.

The price of Brent crude oil increased by 1.63% to 60.31 dollars per barrel.

The biggest risers on the FTSE 100 were Evraz, up 20.4p at 523.6p, BP, up 9.9p at 261.95p, Anglo American, up 97p at 2,581p, and Antofagasta, up 50.5p at 1,532p.

The biggest fallers on the FTSE 100 were JD Sports, down 24.4p at 828.4p, Whitbread, down 79p at 3,201p, Ocado, down 62p at 2,746p, and Smurfit Kappa, down 78p at 3,544p.

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