FTSE 100 surges higher after strong session in US and Asia, Barratts falls

The FTSE 100 was firmly higher on Wednesday as the index took its lead for the Asian and US sessions which closed at, or very near, record highs.

London’s flagship index was 0.6% higher at the time of writing on Wednesday.

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“The FTSE 100 regained some of the ground lost yesterday as a combination of airlines and precious metals miners helped give the market a lift,” said AJ Bell investment director Russ Mould.

“This followed gains in Asia and on Wall Street overnight, with Japan’s Nikkei 225 attaining a new record level.

“Testimony from Federal Reserve chair Jerome Powell before the US Senate saw him flag a return to normality in the labour market. While he made no commitment on rate cuts, jobs data is one of the most important influences on the Fed’s decision making because tight labour market conditions and rapidly rising wages can lead to inflation becoming entrenched”

The Fed chair’s testimony was shrugged off by markets which continue to fixate on AI-related technology shares propping up US indices such as the S&P 500.

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“US indices are still hanging close to record highs, with enthusiasm over AI possibilities and hopes for a soft landing for the economy still buoying sentiment,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Eyes will now be drawn to tomorrow’s Consumer Price Inflation report for indications about the future direction of travel. Another shift lower in headline inflation is expected, which should help maintain the largely optimistic outlook. A reading of 3.1% year-on-year is expected in June, down from 3.3% in May.”

The FTSE 100’s gains were broad on Wednesday, with all but 13 constituents trading in positive territory at the time of writing.

Airlines were among the top gainers with IAG soaring 3.4% and Easyjet adding 2.7%. IAG was the beneficiary of a broker upgrade, and Easyjet embarked on the trip higher in sympathy.

One of the few fallers was Barratt Developments after the housebuilder said it expected completions to fall again next year after a pretty dismal year’s trading in 2024.

“Barratt’s full-year trading update showed that it’s hard to build momentum when the entire housing market has been on unstable ground. The group completed around 14,000 new homes this year, which was towards the top end of group guidance, but still marks a big drop off from the prior year,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Buyers are very sensitive to mortgage availability and affordability pressures. Although there have been improvements on this front over the second half of the year, further easing of mortgage rates will be necessary for activity to pick up significantly.”

Barratt Developments shares were down 1.3% at the time of writing.

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