The FTSE 100 rose amid a broad rally in European shares on Wednesday as investors dared to be optimistic about trade talks and developments in US spending and tax cut plans.
London’s leading index was 0.2% higher at the time of writing as the German DAX added 0.4%. The French CAC soared 1.1%.
“It’s a solid day for European equities as all the major indices moved higher amid progress in the US on policy plans to lower taxes and progress with trade negotiations,” said Dan Coatsworth, investment analyst at AJ Bell.
“Commodity producers, financials, utilities and industrials led the way on the UK stock market. The fact both risk-on and defensive sectors moved higher would suggest a general sense of optimism among investors.
“The US Senate has passed Donald Trump’s tax-cut and spending bill which means the attention now shifts to the House of Representatives for approval. At the same time, there were developments on trade talks between the US and India which gave investors some encouragement. Trump seems optimistic about striking a deal with India, yet there would still be a long list of other countries that need to do the same before 9 July if they want to avoid high tariffs.”
The FTSE 100 has settled into a comfortable trading range between 8,700 and 8,900 where it has remained since late May. One would think the index will need a material improvement in trade talks to retest 8,900.
Cyclical sectors were steaming ahead on Wednesday. Glencore topped the FTSE 100 leaderboard as miners enjoyed a second day of gains after Barclays equity analysts made sweeping price target increases to FTSE 100 miners.
Glencore rose 4% to 303p following a price target increase to 420p, and Antofagasta added 2.8% on a revised price target of 2,200p. Antofagasta was trading at 1,888p on Wednesday.
The gains weren’t limited to the miners. Melrose 3% and was approaching the highest levels since Trump’s tariff announcements. Banks were well bid, with Barclays and HSBC rising around 2%.
Housebuilders had another tough session after Nationwide said average UK house prices were falling. Persimmon lost 4% on Wednesday. ConvaTec was the FTSE 100’s top faller with losses on 6%.