Flying Footsie heads back towards 7000
THE FTSE 100 came within a hair’s breadth of closing above 7000 as the London market enjoyed another day of gains.
The index brushed off immediate fears that Tuesday’s rally – after bruising slides on Monday – was a one-off. It rose 1.7pc, or 117.15 points, to finish at 6998.28.
Many market observers were worried that Tuesday’s recovery was what’s known in the City as a ‘dead cat bounce’ – a phrase which uses the logic that even a dead cat will bounce if it falls from a high enough height.
But travel, retail and other leisure stocks rebounded for the second consecutive session, as a series of upbeat company results also boosted shares.
Michael Hewson, chief market analyst at CMC Markets, said: ‘Less than two days after Monday’s sharp falls, markets have undergone a complete and utter mood change.
‘The concern that rising Delta infections will slow down the economic rebound, appears to have been replaced by optimism that today’s better than expected company reports speak to a consumer that is down but by no means out.’
One example was a bullish update from Next (up 7.5pc, or 552p, to 7946p), which nudged fellow retailers Marks & Spencer (up 5.4pc, or 7.05p, to 138.6p) and Asos (up 4.4pc, or 163p, to 3907p) higher. But Next was beaten to the top spot on the Footsie leaderboard by Rolls-Royce, which tends to excel whenever airline shares are higher because it makes a sizeable amount of its income from flying hours.
The engine maker jumped 7.8pc, or 6.98p, to 97p, and was trailed by other travel-related stocks such as Premier Inn-owner Whitbread (up 6.1pc, or 173p, to 3012p) and British Airways-parent IAG (up 5.6pc, or 8.96p, to 169.42p).
The FTSE 250 closed up 1.9pc, or 422.49 points, at 22,541.97, as traders became more enthusiastic about post-Covid prospects.
WH Smith (up 6.6pc, or 100p, to 1614.5p), Carnival (up 9.4pc, or 9.36p to 1465.4p) and SSP (up 7.2pc, or 16.2p, to 240.6p) all gained, while Easyjet finished up 4.3pc, or 33.6p, at 810.8p after broker Liberum increased the rating on its shares from ‘hold’ to ‘buy’.
It was Cineworld, however, which knocked it out of the park, rising 14.9pc, or 8.68p, to 67.06p after chief rival Odeon said it welcomed 1m customers to its cinemas across Europe last week, signalling that people are still keen to go and see films on the big screen.
Elsewhere on the FTSE 250, reports surfaced that American private equity group Clayton Dubilier & Rice is working on another bid for Morrisons after a £5.5bn offer was rejected last month.
The supermarket group has instead accepted a £6.3bn bid tabled by investment group Fortress. Its offer equates to 254p – but Morrisons’ closing price of 265.1p last night (up 1.5pc, or 4p) indicates that the City is getting ready for a bidding war.
Miners including Antofagasta were higher after copper prices stabilised – even though the group (up 4.3pc, or 58p, to 1422p) saw output drop by 3pc in the first six months of the year.
Footsie peer Rio Tinto announced that after 32 years it will fund a study assessing the environmental damage of its copper and gold Panguna mine in Papua New Guinea. It has not decided whether to fund the mine clean-up. Rio (up 2.3pc, or 135p, to 5971p) is trying to rehabilitate its reputation after it blew up two 46,000-year-old caves in Australia.
The Anglo-Australian group added that it has shut one of four furnaces at its Richards Bay Minerals operation in South Africa, due to a drop in the amount of materials delivered to burn.
It blamed this on the escalating security situation in South Africa, which has seen tensions ignite after former president Jacob Zuma was arrested.