The FTSE 100 jumped on the tailcoats of US equities on Tuesday after a tech rebound drove a sharp increase in the S&P 500 and Dow Jones overnight.
London’s leading index was 0.7% higher at the time of writing. The rally was broad with around 80% of the FTSE 100’s constituents trading in positive territory.
“There is nothing better than a solid day on Wall Street to lift investor sentiment across the pond,” said Russ Mould, investment director at AJ Bell.
“A 2.3% gain in the Nasdaq and 1.8% advance in the S&P 500 yesterday created the right kind of backdrop to put European markets on the front foot. All the major indices in Europe moved higher on Tuesday.”
US technology shares were the driving force behind yesterday’s rally, as beaten-down names such as Tesla, Palantir, and AMD caught the attention of bargain hunters.
London’s lack of mega-cap technology shares meant that if the FTSE 100 was to emulate Wall Street’s strength, it would have to rely on similarly cyclical sectors.
Housebuilders, property, and energy stocks took on the mantle.
Shell added a significant number of points to the index after it announced a strategy ‘to become simpler, more resilient and more competitive’.
The strategy was received well by investors and shares rose 2% on Tuesday.
“In a short statement ahead of its capital markets day, oil & gas giant Shell revealed that it’s upping its shareholder distribution of operating cash flows from the 30-40% range through the cycle up to 40-50%,” said Derren Nathan, head of equity research Hargreaves Lansdown.
“Dividend growth of 4% per year is being targeted but it’s share buybacks that will be the focus of increased payouts. And it’s also trying to maximise the cash generation that drives shareholder distributions.”
Housebuilders and property shares played a large part in the FTSE 100’s rally, with investors picking up shares such as Persimmon, Segro, and Taylor Wimpey near multi-year lows.
“Property-related shares were also in demand, including Segro at the top of the FTSE risers’ list and many housebuilders looking strong. Segro announced a data centre joint venture, giving investors a different spin on the AI theme,” Russ Mould explained.
Kingfisher was the FTSE 100’s top faller after announcing falling sales for the year to January 2025. Shares were 14% lower at the time of writing.