The FTSE 100 started a new week with solid gains built on optimism over the vaccine-led fightback against the pandemic, strong gains in Asia and US stimulus hopes, says AJ Bell investment director Russ Mould.
“Japanese stocks achieved the milestone of hitting their highest level in 30 years, further demonstrating how resilient appetite for risk remains as investors are prepared to look beyond lockdown.
“The positive sentiment also comes despite some concern about the efficacy of vaccines, notably the AstraZeneca and Oxford University jab, against the new South African variant of Covid.
“US Treasury Secretary Janet Yellen’s weekend claim that the country could return to full employment if Congress were to pass President Biden’s $1.9 trillion stimulus package gave markets a window into what such significant action could mean for the world’s largest economy.
“Oil prices surged to pre-pandemic highs as traders of the commodity looked towards a potential recovery in demand. This could help add fuel to M&A chatter in the industry after it emerged ExxonMobil and Chevron had held talks over a combination last year.
“The last round of mega-mergers came a little over 20 years ago. However, this time round tie-ups could just double businesses’ problems given the need to transition away from the traditional oil and gas assets which dominate their portfolios as part of a global transition away from fossil fuels.”