The FTSE 100 was up 0.6% in midday trading on Monday, as mining firms lifted the index higher following commodity price weakness last week as a result of concerns around global growth.
However, the large dividends offered by miners proved attractive after a dip last week, sending commodities stocks soaring to the top of the FTSE 100 in Monday trading.
“On the UK market, the FTSE 100 moved 0.3% higher to 7,228, driven by miners regaining favour with investors after a patchy session last week caused by a retreat in metal prices,” said AJ Bell investment director Russ Mould.
“The market has been concerned in recent weeks about the outlook for the global economy and how recession fears might translate into weaker commodities demand. Names like Rio Tinto lost share price momentum, and in many cases these big miners saw all their year-to-date share price gains wiped out.”
“With big dividends on offer, investors have clearly been hovering over the ‘buy’ button following recent share price weakness and today seems to be the day these mining names are being added to portfolios once again.”
Anglo American shares rose 3.2% to 3,164.5p, Glencore share gained 3% to 459.9p, Rio Tinto shares increased 2.9% to 5,126.5p, Antofagasta shares picked up 2.6% to 1,216p and Fresnillo shares saw an uptick of 1.9% to 802.4p.
Chinese-focused stocks rebound
Meanwhile, Chinese-focused stocks gained as the Hang Seng rose 2.3% to 22,229.5 on the back of easing Covid-19 restrictions.
Asia-focused Prudential increased 1.9% to 1,005.2p and Scottish Mortgage Investment Trust rose 2.7% to 752.8p as its portfolio holdings including Tencent and Alibaba climbed.
European Markets
The European markets also enjoyed a strong trading session, with the German DAX rising 0.9% to 13,240.1.
“A good start to the week for European equities bodes well for investors hoping for their portfolios to be repaired after a damaging start to the year,” said Mould.
“Germany’s DAX index jumped … thanks to strength in consumer-facing companies, miners, industrial groups and healthcare names. The top performer for automotive parts specialist Continental while Adidas was also in fashion.”
US markets rise
Across the Atlantic, revised expectations saw US Federal Reserve interest rate projections lower from 4% to 3.5%, providing a wave of relief in the American market.
The NASDAQ was up 0.4% to 12,189.5 in pre-open trading, with the Dow Jones up 0.2% to 31,551 and the S&P 500 up 0.3% to 3,928.