The FTSE 100 is outperforming eurozone indices as commodity and banking stocks are in high demand.
Europe
Also contributing to the bullish mood is the news the UK has vaccinated more than 15 million people by 15 February - hitting its target. In terms of index points, Royal Dutch Shell, BP, Rio Tinto, BHP Group, HSBC and Barclays are some of the biggest gainers on the FTSE 100. Natural resource stocks are benefitting from the wider optimism that the global economy will recover and in turn, mineral demand will rise. In light of the news that Britain is making great progress in terms of rolling out vaccines, there is chatter the country will begin to ease up on restrictions sooner rather than later. There is a growing sense the country will be allowed to slowly re-open in the next few weeks or months, which should spark economic activity.
If restrictions are loosened, travel, airline and leisure stocks would arguably have the most to benefit. On the FTSE All Share Index, National Express and Stagecoach are some of the biggest gainers. EasyJet and TUI are showing respectable gains also. WH Smith earns a large portion of its revenue from transports hubs, it is also higher on the day. The hospitality sector is enjoying a bullish move today as the possibility of the restrictions being relaxed a little has pushed up demand. Restaurant Group, JD Wetherspoon and Marstons are up 4-9%.
Mitchells & Butlers shares are higher too after the company confirmed that it plans to raise £350 million from a share offering. In addition to that, the firm has agreed a £150 million unsecured credit facility with its lenders. The pub group wants to beef up its finances so it can see through the next few months. There it is a distinct possibility that pubs will be allowed to operate on a restricted basis by the summer.
Bellway and Persimmon have risen the most in the housebuilding sector. According to Rightmove, UK average house prices increased by 0.5% in February.
US
US markets are closed today as the nation is celebrating President’s Day.
FX
The US dollar index is lower as dealers are turning their backs on assets that are considered to be lower risk. EUR/USD has been given a little help by the weakness in the US dollar. GBP/USD is trading above the 1.3900 mark – its highest level since April 2018. Sterling is strong in its own right as the UK is making good progress with the vaccination process – its hit is target of vaccinating 15 million people by 15 February. Britain’s relative success on the vaccine front has boosted the pound as the country is further down the track with respect to reopening its economy. Last Friday, it was confirmed the UK economy expanded by 1% in the last three months of 2020, easily beating the 0.5% consensus estimate. The CMC GBP Index hit its highest mark in almost one year.
Bitcoin traded at a new record high over the weekend, it approached the $50,000 mark. The digit currency is gaining popularity with well-established names like Bank of New York Mellon and MasterCard. Morgan Stanley is contemplating investing in bitcoin, it seems the Wall Street firm is thinking about going down the Tesla route, the electric vehicle company invested $1.5 billion in the cryptocurrency recently.
Commodities
Platinum traded above $1,300 for the first time since September 2014. The shiny metal is used in catalytic converters, which brings down emissions from vehicles. In recent years there has been a push for more environmentally friendly policies. The auto sector had a tough time in 2020 but there is chatter the industry will rebound in 2021, hence the jump in the commodity. In a similar fashion, copper eked out a fresh eight year high, as the prospect of higher economic growth later this year has spurred buying.
WTI and Brent crude oil hit a new 13 month high on the back of creeping uncertainty in the Middle East, supply concerns as well as hopes for a robust economic rebound from the pandemic. Heightened Saudi-Yemen tensions contributed to the firmer energy price. According to the EIA, US oil inventories dropped by 6.6 million barrels recently, which could be construed as a rise in demand.
Gold is a little lower even though the dollar has dipped. The overall risk-on attitude – rally in stocks, oil and industrial metals – has encouraged some traders to drop the yellow metal and in turn purchase assets are considered to be riskier.
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