UK markets surged higher on Wednesday, in contrast to a more bleak session on the continent, with investors looking for a nascent economic recovery towards the end of a bleak second quarter and reporting income is optimistic.
The British blue-chip FTSE 100 index rose 0.7% in morning trading, compared with a 0.1% drop for Frankfurt’s Dax and a 0.1% gain for the CAC 40 in Paris. Europe’s Stoxx 600 increased by 0.2%.
Figures released on Wednesday paint a bleak picture of the locked UK economy, with output falling a fifth in the second quarter. However, the decline was widely predicted, and economists were comforted in an active activity in June when the coronavirus lockout was lifted. Production rose 8.7% that month compared to May, better than forecast.
“We expect another significant increase in July as a host of services businesses are allowed to open,”; said James Smith, an economist at ING. “The timing of all these changes (at the end of the second quarter or the beginning of the third quarter) could mean that UK recovery in the third quarter looks bigger than in many other economies.”
UBS Wealth Management added that there has been a “strong recovery as the economy breaks out of the deadlock” and it expects “pent-up consumer demand to drive a strong recovery. in the third quarter ”. It added that UK assets “appear to be undervalued” and that it prefers UK stocks over those in the euro zone.
However, the pound was barely budging after the data release. It was up 0.1 percent recently at $ 1.3057. The UK’s more domestically focused FTSE 250 Index fell 0.2%.
Georgina Taylor, a fund manager at Invesco, warns that the UK is at “the bottom of the pile at the moment” compared to other countries in Europe due to the heavy weight on the economy. service.
“Nowhere is that working,” she said, “but when production comes back to work, economies that are a greater driver of economic growth may return faster than economies that are based on. service like UK.
The UK market was also supported on Wednesday by a series of optimistic earnings reports. Admiral Insurance was among the best performers after reporting a sharp increase in profits as the number of road accidents plummeted during the shutdown, pushing insurance claims down.
Asos, the fashion e-commerce retailer, said it expects its annual revenue and profit to be “significantly” better than expected thanks to fewer returns and customers buying pants. jacket related to the row lock.
Across the Atlantic, Wall Street is set to rebound from Tuesday’s slump that comes after Mitch McConnell, the US Senate Republican leader, said there were no talks on the stimulus package. enjoy the new economy since Friday. S&P 500 futures are up 0.7% in recent transactions.
Gold rebounded after its biggest drop in seven years, with the precious metal trading 1.9 percent higher at $ 1,948 an ounce. Yields on 10-year US bonds rose 0.07 percentage points on Tuesday, adding 0.02 percentage points to 0.679%. The yield on a bond increases when the price falls.
Shares in the Asia-Pacific region slipped. China’s CSI 300 for Shanghai and Shenzhen-listed shares fell 0.7% on Wednesday while Hong Kong’s Hang Seng rose 1%. Australia’s S & P / ASX 200 fell 0.2%.
In New Zealand, the S&P / NZX 50 index fell 1.5% on Wednesday as authorities brought the city of Auckland back to tight lock in response to the first Covid-19 purchases. locally for over 100 days. Authorities are probing whether the outbreak is linked to the import of infected cold goods.
The US dollar, measured against the basket of other currencies, fell 0.1%. Japan’s standard Topix equity index rose 1.2% as the yen weakened 0.3% to ¥ 106.77 / USD.
Additional reporting by Daniel Shane in Hong Kong