The FTSE 100 built on yesterday’s gains and approached the key psychological 7,000 level in a broad rally powered by cyclical stocks.
Smurfit Kappa was the top riser, up 6.5%, followed by WPP adding 3.6% and Prudential 3.4% stronger.
“The FTSE 100 was on track for its fourth consecutive day of gains, flirting with the 7,000 level once again as investors bid up shares in multiple sectors including energy, pharmaceuticals and mining,” said Russ Mould, investment director at AJ Bell.
The broad rally was a reflection of improving sentiment in UK assets following the new Chancellor’s move to scrap almost all measures from September’s mini-budget.
“Investors appear to have regained optimism after the U-turn in UK government policy and hopes that the new earnings season that kicked off last week might not be as bad as feared,” Mould said.
Growth and earnings
With Hunt seemingly steadying the ship after yesterday’s announcements, attention will now start to shift to global economic growth and company earnings.
In the UK, Moneysupermarket.com raised their full year guidance on strong demand while Bellway shares sank after it warned of challenges in the coming year.
However, the major focus will be upcoming earnings from US tech giants next week. Apple and Amazon are both set to report Q3 earnings next Thursday and provide insight into the impact of soaring inflation and rising rates on the global consumer.
With economic growth stuttering, company earnings will likely be the driver of equities in the short-term. If there are signs consumers are holding back on spending, investors will be concerned economic deterioration accelerates through the winter which could play out negatively in equity markets.
However, early signs from Bank of America suggest the consumer is in a better position than some feared after they said they saw spending increase 9% across their debit and credit cards.
Next week’s tech earnings will set the tone for global markets in the run up to key central bank meetings in November.