The FTSE 100 surged higher on Tuesday as optimism grew around the economic impact of the new COVID variant and investors continued to cheer China’s decision to cut their RRR rates.
China yesterday announced they would be cutting their Reserve Requirement Ratio by 0.5% which promises an injection of liquidity into the Chinese economy.
Miners were big beneficiaries of the news. Anglo American, Glencore, BHP, Rio Tinto and Antofagasta were all over 3% stronger. Anglo American was the FTSE 100’s top riser adding 5.1% at the time of writing.
Although the mining sector was a stand out performer, the gains were broad with 90 of the 100 stocks in the FTSE 100 higher at 11am on Tuesday.
AstraZeneca was the FTSE 100’s biggest faller, down 1.7%.
“The more positive market sentiment seen at the start of the week extended into Tuesday, supported by waning fears about the Omicron variant and robust Chinese trade data,” says AJ Bell investment director Russ Mould.
“Suggestions the new Covid strain might only trigger mild symptoms are prompting relief among investors and helping travel stocks take off – however given the typical gap between infection and hospitalisation with coronavirus it remains early days in our understanding of just how virulent Omicron is.”
“China import data hinted at a domestic recovery and export data, while lower, was still notably better than expected. The net result being that the FTSE 100 index is now back at the levels it traded at before the Omicron-driven sell-off.”
Ashtead was a significant gainer after the plant hire group posted a 20% increase in rental revenue.
“Ashtead’s heavy duty industrial rental equipment fell out of favour during the peak of the pandemic, which is why new results look so spritely in comparison. However it’s been achieved, knocking the lid off full year expectations is good going,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.