FTSE 100 gains as bumper US jobs data supports risk sentiment

The FTSE 100 gained on Monday as the wave of positive sentiment established by robust US jobs data on Friday pushed into a second session.

A bumper Non-Farm Payrolls reading on Friday confirms the US economy can stomach the high-interest rate environment.

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The 353,000 increase in the headline jobs added may have unnerved some equity investors concerned the Federal Reserve would push the first rate cut even further into the future.

Instead, US stocks surged higher in Friday’s session, suggesting equity bulls are happy for rate cuts to be put off as long as the US economy remains supportive of earnings.

“The markets continue to forge ahead despite a blowout jobs report from the US last Friday which seems to have finally put the nail in the coffin of the idea rates will be cut next month,” said AJ Bell investment director Russ Mould.

“The FTSE 100 clawed its way to its best levels in nearly a month with fairly broad-based strength throughout the index. There are just the first signs that we are inching away from a looking glass world where bad news is good news because of the implications for monetary policy to good news being good news once again.”

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The FTSE 100 was 0.4% higher at the time of writing on Monday.

The US economy has been remarkably resilient in the face of the cost of living crisis, and higher rate environment, and predictions of a recession have been largely extinguished.

In the UK, the economic situation is less certain. Still, investors seem to be happy to follow the United States’ lead, given the Bank of England and Federal Reserve are making similar sounds on rate cuts.

There were signs of concern about UK-focused companies on Monday, with 3% falls for Howden Joinery and JD Sports.

We wrote last week that GSK looked set to trend to the top of the well-established trading range after releasing a positive update. This view was corroborated by equity analysts at Deutsche Bank, who raised their price target to 1,950p, sending GSK shares 2.5% higher.

Ocado was the FTSE 100’s top riser, gaining 4.4%, as the retailer bounced off support at 500p.

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