Home Business NewsMarkets rebound on Fed bond buying

Markets rebound on Fed bond buying

by LLB Editor
16th Jun 20 11:58 am

Just as markets were starting to weigh up the prospect of another prolonged sell-off amid coronavirus second wave fears, talk of a $1trn infrastructure plan being considered by the Trump administration has put a rocket under stocks again.

Also driving sentiment was the start of the Federal Reserveโ€™s corporate bond buying programme,โ€ says Russ Mould, investment director at AJ Bell.

โ€œLast night in the US, the S&P 500 jumped 0.8% while the Nasdaq advanced 1.4%. However, much larger gains were seen across the UK and Europe on Tuesday with investors optimistic that governments and central banks still have a few tricks up their sleeve to provide further support to the markets.

โ€œThe FTSE 100 jumped 2.5% to 6,213 with the index driven by gains in the oil, consumer goods, tobacco and construction sectors. This is interesting as it shows investors have been drawn to a mixture of defensive and more risky sectors, rather than just one of them being in vogue.

โ€œShare prices gains were seen across all parts of the market with only two FTSE 100 stocks in negative territory: insurer Admiral (down 0.5%) and healthcare group Hikma Pharmaceuticals (down 0.4%).

โ€œHelping to drive investor sentiment was news from several companies about their reopening plans, making investors more optimistic about their near-term earnings potential. Cineworldโ€™s jumped 6.7% after it said its cinemas would reopen in the coming weeks, while Greggs advanced 3.6% on news that it would reopen around 800 shops on 18 June.

โ€œIn overseas markets, Germanyโ€™s DAX index traded 2.5% higher while in Asia, Hong Kongโ€™s Hang Seng index advanced by 2.6% with energy, technology and consumer non-cyclicals the best performing sectors.โ€

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