The FTSE 100 rose on Thursday after US stocks closed at a record high overnight, driven by technology shares.
Record highs for US stocks were achieved despite higher inflation, suggesting underlying investor optimism and a willingness to look past the risk presented by the Middle East conflict.
“Back-to-back hot inflation prints — CPI at 3.8% annually and PPI surging 6.0% year-on-year — and yet the S&P 500 managed to push to new record highs,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“Markets are making a clear bet that the earnings cycle, still delivering double-digit growth for a sixth consecutive quarter, can absorb an inflation premium that the Fed will need to stop pretending is transitory.”
London’s leading index was trading up 0.2% up at the time of writing as UK-focused investors felt the positivity emanating from across the pond.
Bond market calm also encouraged people to return to UK stocks, with UK growth in Q1 helping lift the mood.
“Gilt yields were steady as a potential challenge to Keir Starmer’s premiership continued to bubble away in the background, while domestic-facing stocks regained some of the losses endured amid this week’s turmoil,” explained Dan Coatsworth, head of markets at AJ Bell.
“However, the latest goings-on in Westminster could be overshadowed by global events as Donald Trump continues talks with Beijing. As well as progress on trade, markets are alive to the possibility the summit might pave the way for China to help the US on Iran.
“Oil prices remain firmly back above $100 per barrel but below the highs seen last month.”
In London, Legal & General was the FTSE 100’s top riser after the Financial Times reported that several potential suitors were considering bids for the company.
L&G shares were over 5% higher at the time of writing.
3i Group was the FTSE 100 top faller as bad news from its largest holding, Action, sent the investment trust into a tailspin.
“Shares in FTSE 100 investment trust 3i Group crashed 19% after the company paid the price for being too reliant on a single holding. Its portfolio is dominated by Dutch value retailer Action whose news flow has soured of late,” said Dan Coatsworth, head of markets at AJ Bell.
“For a long time, Action was seen as invincible, one of the fastest growing retailers in Europe and the reason why investors were happy to pay a large premium to own 3i Group shares. That goodwill has now disappeared.
“First, 3i Group warned that Action wasn’t doing as well in France, then it revealed the retailer would try its luck at the highly competitive US market. Now we’ve got a warning of a broader slowdown in sales growth, blamed on France again and lower footfall in Germany.”
Burberry shares were 8% lower despite the CEO saying they were at an ‘inflexion’ point with full year sales returning to growth. Investors weren’t impressed and may be concerned about future growth and the impact from the Middel East war.