A sturdy start to the US earnings season and an improved commodities demand outlook encouraged FTSE indices to rack up their third consecutive session of gains on Wednesday.
The FTSE 100 index firmed 108.8 points to close 2.6% higher at 4,346.5, while the FTSE 250 index took on 164.1 points or 2.2% to settle at 7,575.2.
Gains on the continent were of a similar magnitude, with Germany’s DAX adding 3.0%, while France’s CAC-40 and Spain’s IBEX were 2.7% higher. Helsinki’s OMX jumped 3.8% as Nokia enjoyed the strong tech sentiment following Intel’s bumper earnings late Tuesday.
It was this quarterly performance from Intel, in conjunction with second-quarter earnings from Goldman Sachs that far exceeded market expectations yesterday, that was largely responsible for the uptick in sentiment in both the US and on this side of the Atlantic.
Wall Street had rallied more than 2% by the time UK indices closed, with NASDAQ more than 3% higher.
In the UK, both leading blue-chip and mid-cap indices put in stellar performances across the board on Tuesday; FTSE 100 fallers could be counted on one hand.
Even mixed economic data failed to dampen sentiment. The ILO measure of unemployment jumped by 2.4 million over the three months to May, bringing the annual rate to a higher-than-feared 7.6%, versus 6.9% in the previous quarter. However, the claimant count measure increased by just 23,800 in June against forecasts for a rise in the region of 41,000, implying that the pace of job losses is easing.
The FTSE 100 top risers were a fair mix of financials and commodity plays, the latter continuing to gain on the back of the improved global demand outlook following reassuring import figures from China and rising commodity prices as the US dollar weakened.
Miners Xstrata, Kazakhmys and Fresnillo climbed between 5.3% and 8.4%, while oil producers Tullow Oil, BP and Royal Dutch Shell rose 2.7%-4.9% each. Tullow put in the strongest performance of the oil stocks after announcing Ghana’s formal approval of its Jubilee field plan.
Banks Lloyds, Barclays, HSBC and Royal Bank of Scotland took on 3.9%-4.5% apiece as the sector continued to celebrate Goldman Sachs’ second quarter success.
Insurers were also in demand as industry consolidation talk continued to do the rounds. After Friends Provident announced earlier in the week that it had rejected an approach by Resolution, the focus today shifted to RSA Insurance, which according to market rumours could be the subject of a Generali bid. RSA itself ticked up 1.9% but peers Old Mutual, Legal & General and Prudential rallied 5.2%-7.2% higher.
Elsewhere, news that real estate company Land Securities is preparing for new purchases gave the commercial property sector a boost, with Land Securities up 5.1%, Hammerson 2.7% firmer, British Land 2.4% ahead, and Liberty International gaining 2.3%.
Of the three FTSE 100 stocks that slipped into the red on Tuesday, ICAP was the worst off as it traded ex-dividend. The interdealer broker this morning issued a solid trading update that was well-received by most analysts, although consensus appeared to be that the shares are valued too highly after a sterling rise so far this year and given near-term headwinds.
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