FTSE 100 rises to 20-month high amid fresh records on Wall Street
European stock markets surged higher on Tuesday as investor confidence was boosted by fresh records on Wall Street on Monday night, as well as continued strength in oil prices.
In London, the FTSE 100 (^FTSE) rose for a third straight session, climbing 0.8% to a 20-month high, its highest level since February 2020. The index was boosted by consumer goods company Reckitt Benckiser (RKT.L) which raised its outlook for full-year sales.
“With the FTSE 100, what you’ve got is an unusual mix of unpredictable stocks like oils and commodity prices which are showing some signs of life,” said Russ Mould, investment director at AJ Bell. “What it hasn’t got are the growth stocks that have been so powerful in the US.”
The pound also rose to a 20-month peak against the euro (GBPEUR=X) on Tuesday, trading at 84.2p to the euro, 0.2% higher and the best since February 2020. It is also up 0.2% against the dollar at $1.3792.
Traders will have their attention on the UK’s autumn budget, which takes place on Wednesday. However, many of chancellor Rishi Sunak’s announcements have already been reported, including lifting the public sector pay freeze and an increase to the minimum wage.
Read more: Budget 2021 preview: What to expect from chancellor Rishi Sunak
In Europe, German exports were hit by shortages last month. According to the Ifo Institute’s export expectations, the index fell to 13.0 points from 20.5 points in September, the lowest value since February.
Across the pond stocks climbed to fresh record highs, with the S&P 500 (^GSPC) rising 0.5% and the tech-heavy Nasdaq (^IXIC) gaining 0.5% at the time of the European close. The Dow Jones (^DJI) edged 0.3% higher.
Tesla‘s ((TSLA)) surge to $1tn (£730bn) for the first time helped drive the S&P 500 and Dow Jones to new peaks last night. Elon Musk’s electric carmaker received an order for 100,000 of its vehicles from rental company Hertz (AZC0.F).
According to the Conference Board on Tuesday, US consumer confidence improved this month for the first time in four months. Its consumer confidence index increased in October, following declines in the previous three months. The index rose to 113.8, from 109.8 in September.
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This was ahead of expectations, with a Bloomberg survey of economists predicting a drop to 108.
Lynn Franco of the Conference Board said: “While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted. The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October.”
Watch: Tesla surpasses $1 trillion valuation
Meanwhile, Asian markets were mixed on Tuesday after another property developer defaulted, adding to mounting concerns about the sector caused by the debt crisis at Evergrande Group (3333.HK).
Modern Land (1107.HK) said it missed a debt payment due to “unexpected liquidity issues,” after Fantasia Holdings Group (1777.HK) defaulted on maturing dollar bond in early October.
The Nikkei (^N225) managed to close in positive territory, climbing 1.8% in Tokyo, while the Hang Seng (^HSI) fell 0.6% in Hong Kong, and the Shanghai Composite (000001.SS) dipped 0.3%.
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Elsewhere, oil prices remain near records after Brent crude (BZ=F) hit a three-year high of $86.50 a barrel on Monday. Prices have more than doubled from around $40 a barrel a year ago due to a sudden rise in post-pandemic energy demand, while supply remains tight.
“This rise in oil prices is already a significant concern for the Biden administration who for the past few months have been trying to divert attention away from their own culpability in helping to push fuel prices higher with their green agenda, and the refusal to invest in new shale capacity, as well as the cancellation of the Keystone pipeline,” Michael Hewson, of CMC Markets, said.
“It does however make good politics to blame an external third party, the only problem being that the US public isn’t buying it. If president Biden really wanted to help try and keep a lid on prices, he could simply sanction a release from the Strategic Petroleum Reserve.”
Watch: $90 Brent crude oil on the horizon, analyst predicts