The FTSE 100 gained on Monday as London’s leading index tracked a European rally higher, albeit at a slower pace than counterparts in mainland Europe.
“The FTSE 100 broke its losing streak to trade higher on Monday with healthcare and financial stocks doing much of the heavy lifting. There was wider optimism across Europe as stocks recovered from a rocky week but Asian markets remained on the back foot as China disappointed on stimulus,” said AJ Bell investment director Russ Mould.
“Chemicals firm Croda topped the UK’s flagship index. The shares have had a tough year so the third-quarter sales growth and retained profit guidance contained in its latest update were well received by relieved investors.”
The FTSE 100 has been under pressure since the US election on concerns about ramifications for trade. The hawkish Bank of England interest rate cut last week also took the wind out of UK equity’s sails, with borrowing costs now expected to fall at a slower pace than previously thought.
Soft performance in UK equities last week is at odds with US stocks that surged higher as investors cheered the prospect of deregulation and lower taxes after Donald Trump won his second term in the White House. Despite the strong gains in US shares, analysts remain positive about the outlook for US equities.
“I remain bullish, with solid earnings growth, strong economic growth, and the forceful ‘Fed put’ providing a solid foundation for the market to build upon, while cleaner post-election positioning, and expectations that Trump’s proposed stimulus will provide a renewed economic sugar rush, are also helping to move things along rather nicely,” said Michael Brown Senior Research Strategist at Pepperstone.
Strength in US stocks threatens to leave London’s market further behind, with doubts around Chinese stimulus acting as a counterweight. The FTSE 100’s gains were broad on Monday with a splattering of resources stocks in the red reflecting ongoing frustrations at slow growth in China. Rio Tinto slipped 1%.