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Thursday, October 28, 2021
Stocks & Shares

FTSE 100 rises as vaccine drives hopes for economic recovery

economic recovery

The FTSE 100 ended the day 2.5% higher, while the FTSE 250 finished 1.8% higher

Sterling jumped above $1.39 for the first time since early 2018 in Monday’s trading, as it gained more than half a cent, soon after the government confirmed that the government had met its initial COVID-19 vaccine target of 15 million people.

Stock markets climbed as well, with the FTSE 100 finishing the day 2.5% or 166 points higher, at 6,756 – its highest level for almost a month. In value terms, the index added £44bn to its market capitalisation.

Energy and travel-related stocks led the gains, with the parent of British Airways, IAG, adding 6.8%.

The FTSE 250 finished the day 1.8% higher.

The performance was rare for UK markets as any significant rise in the pound’s value since 2016 has resulted in the FTSE 100 being clobbered due to the high prevalence of dollar-earners in its ranks.

According to experts, sterling was now in range of achieving $1.40 due to the UK’s trade deal with Brussels, along with expectations of a roadmap from lockdown, which is due next week. That would be 10 cents short of the level before the Brexit vote.

Chris Turner, global head of markets at ING, said: GBP (the pound) continues to reap the dividends of a successful vaccine rollout and momentum is building towards a re-opening of the economy, probably starting with schools on March 8th.

Sterling hit a nine-month high against the euro earlier in the day.

Craig Erlam, senior market analyst at OANDA Europe, said of the day’s deals: There’s real momentum behind the global recovery trade and with every passing week, it seems investors are becoming more optimistic about it.

The vaccine rollout is providing enormous encouragement, with the UK surpassing 15 million vaccinations and the topic of conversation finally turning to reopening the economy. Cases and fatalities are falling rapidly due to a combination of the vaccine and the lockdown and the progress of the last two months should ensure restrictions are eased for the last time starting in a few weeks, Erlam said.

He said that the UK economy has suffered worse than most this last 12 months but could now be positioned for a powerful recovery.

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