Footsie rides wave of strong sentiment

Markets closed the day out in positive territory as traders welcomed a series of encouraging data from China, the eurozone and the UK that showed the service sector was recovering.

FTSE 100 shares enjoyed their share of the spoils, closing the day up 162.27 points, or 2.6 per cent, at 6,382.41.

The leading index could have closed higher had the pound not also had a strong day against the dollar, up 0.38 per cent with a pound worth $1.260. Typically the market rises when the pound weakens, due to shares becoming “cheaper” to foreign investors. But continuing unrest in the US is taking its toll on the currency. Against the euro, it was down 0.32 per cent at €1.120.

Strong Chinese services data hit ten-year highs as the country starts to recover from the coronavirus crisis.

In the UK, the IHS Markit purchasing managers index for May came in at 29 points, up from an all-time low of just 13.4 in April. Anything below 50 is seen as a shrinking sector, but investors appeared upbeat at the speed of its return.

David Madden, financial analyst at CMC Markets UK, said: “The strong services data from China overnight set the tone for the session. Everyone knows the lockdowns have been brutal in terms of the global economy, but there is a feeling that things are moving in the right direction.”

In company news, the end of trading marked the moment companies discovered whether they would be promoted or demoted between the FTSE 100 and FTSE 250. Easyjet and cruise operator Carnival both fell out of the FTSE 100 in the latest reshuffle, along with Scottish Gas owner Centrica and Meggitt.

Ladbrokes owner GVC, which has benefited from a rise in online gambling during the crisis, joined Avast, Kingfisher and Homeserve in gaining promotion to the top index.

Elsewhere, Frankie and Benny’s owner The Restaurant Group is set to permanently close between 100 and 120 restaurants, with the loss of up to 3,000 jobs, as the lockdown takes hold. Investors were pleased with the action, sending shares up 8.4p to 73.95p.

British Airways’ owner ended up by 28.6p at 279.2p, despite government suggestions it could lose some prime Heathrow slots.