The FTSE 100 climbed on Wednesday following a rally in Asian markets and hopes there would be a ceasefire in Ukraine.
Asian market strength included an impressive 9.1% jump in the Hang Seng index which translated to a strong start for European equites.
“After a big sell-off in Chinese stocks on Monday and Tuesday, Beijing has stepped in with pledges of support to try and stabilise markets,” said says Russ Mould, investment director at AJ Bell.
Ongoing negotiations between Ukraine and Russia also helped lift sentiment as investors positioned for a potential ceasefire.
“There are signs of optimism coming through on financial markets today with the FTSE 100 opening up 1.2% in early trade amid fresh signs a negotiated deal to end the conflict in Ukraine may be a step closer,” said Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown.
Lund-Yates also highlighted optimism around inflation. The falling oil price may mean we have seen a top in a inflation.
“This comes hot on the heels of a rally in Asia and the US, where there are genuine hopes inflation may have peaked.”
Interest Rate Decisions
The markets are awaiting the U.S. Federal Reserve’s policy decision in which it is expected to raise rates on Wednesday.
Investors are flocking to financial stocks with the additional expectations the Bank of England will raise interest rates as a result of increasing inflation and the recent decrease in UK employment rate. Standard Chartered shares are up 2.3% to 493p while Lloyds and Barclays gained between 2.1% and 2.4%.
Scottish Mortgage Investment Trust saw its stock rise 7.6% to 944.9p as its holdings in Asian companies Tencent and Alibaba saw rebounds of 23% and 26% respectively.
Prudential rose 5.9% to 1,059.5p as its refocus on the Asian market in 2021 pulled its share price higher along with the rising Hang Seng index.
“In the UK, the FTSE 100 jumped 1.4%, led by companies exposed to Asia including Scottish Mortgage Investment Trust, Burberry and Prudential,” said Russ Mould.
Fallers
The top fallers were led by Avast with a decline of 11.5% to 570.1p after an $8.6 billion merger with NortonLifeLock was halted by an investigation by the Competition and Markets Authority (CMA).
“As the companies are close competitors, with few other significant rivals, the Competition and Markets Authority is concerned that, if completed, the proposed deal could lead to a reduction in competition in the UK market,” the CMA said in a statement.
BAE Systems fell 3.1% to 709.4p as Russia and Ukraine to discuss a peaceful resolution to the ongoing conflict.
Pearson saw its share price fall 2.2% as the buzz from its declined £7 billion Apollo cash offer subsided.
