by On Tuesday, the FTSE 100 index in the UK rose to reach its highest level seen in the last two weeks, with commodity stocks leading gains. This was because global sentiments got a boost from China’s announcement of easing COVID-19 curbs in the country.
China contributes to rise
The quarantine time period required for inbound travelers was reduced by half in China, marking a major easing in one of the strictest coronavirus curbs imposed in the world. This saw global commodity and equity prices rise higher.
There was a 0.9% increase in the blue-chip FTSE 100 index, which moved up to its highest level since June 10th. Meanwhile, there was a 0.1% rise recorded in the domestically-focused FTSE 250 index. There was a 2.7% gain in mining and industrial metal stocks, while a 2.2% rise was also seen in oil majors. The hopes of a revival in demand in the second-largest economy in the world gave crude and metal prices a boost.
Market analysts said that anything depending on the Chinese market for a boost was performing well today. This prompted many investors to buy the dip because they believe that there will be an increase in demand from China.
Performance of FTSE
As compared to its global peers, Britain’s FTSE 100 index has performed really well because of a major presence on the index of healthcare, commodity, and consumer companies. These have recorded gains thanks to a surge in global prices of commodities and worries about growth.
There was a 4.2% gain in Petrofac Ltd after the oilfield services provider said that its performance in the half-year of trading turned out to be in accordance with expectations. This was because demand was high due to a rise in prices.
There was a 1.9% rise in the UK insurer index, after Rishi Sunak, the finance minister said on Monday that they want to introduce reforms for insurer solvency rules as quickly as possible. There was a 6.3% decline in Utility Pennon, as it fell to the bottom of the FTSE 250 index. This was after a case was launched against the company by the water regulator in Britain.
Sterling remains strong
On Tuesday, there was a rise in the British pound against the US dollar, while it remained stable against the euro, despite an uncertain economic backdrop and rising Brexit-related concerns. In early trading, the currency had remained flat, but it climbed by 0.16% against the dollar and fell 0.06% against the euro.
Attention was focused on the economic backdrop of the UK, as inflation had risen to a record high of 9.1% in the last month, which is the highest in G7 countries. Andrew Bailey, the governor of the Bank of England (BoE) will be speaking on Wednesday at the annual forum of the European Central Bank (ECB). Traders will be keeping an eye on his comments to determine the monetary policy outlook to expect in the future, or any other changes in stance.
