Bank bulls push markets into the green as Covid optimism grows
BANKING stocks helped push London markets firmly into the green yesterday, boosted by strong earnings reports from the big US lenders while optimism over a solid economic rebound took hold of global indices.
Morgan Stanley reported a 150pc jump in quarterly profit, beating market expectations as a global deal making boom, and record levels of capital markets activity, boosted its investment banking and trading desks.
The Wall Street bank’s bumper earnings followed similar results from JP Morgan Chase, Goldman Sachs and Bank of America, reinforcing hopes of a swift economic recovery.
They gave financials in London a leg up yesterday, with Natwest among the biggest blue-chip risers as it led banks higher. It gained 5.3p to 199.5p. Barclays was close behind, adding 4.5p to 189.2p, while Lloyds rose 0.65p to 43.46p and HSBC gained 6.3p to 427.5p.
Gains among financials added to a stellar day for the markets as the FTSE 100 broke the 7,000 level for the first time since February 2020. Stocks continued to rally on rebound hopes amid an advanced vaccine rollout and positive talks of the economy’s future state. The benchmark closed up 36.03 points to 7,019.53, with analysts saying the breakthrough represented a “massive milestone” in a recovery from the pandemic and indicated a change in investor confidence.
The FTSE 250 followed suit, continuing its recent rally to end up 50.14 points at 22,522.18.
Miners and oil producers were in demand yesterday after fresh data overnight showed China’s economy jumped by 18.3pc in the first quarter of this year, led by strong industrial output. FTSE 250 Russian miner Petropavlovsk was the second biggest winner among mid caps, closing up 1.34p to 26.42p.
Retailers also had a good day on the back of England reopening earlier this week, combined with recent positive trading updates. FTSE 100 Next boosted 224p to £82.04, while JD Sports added 18.2p to 929.6p. Ocado, meanwhile, shot up 40p to £21.81 after saying it will invest £10m in driverless vehicle start-up Oxbotica as the online supermarket looks at the potential for automated deliveries to customers.
Elsewhere among companies, FTSE 250 manufacturer and distributor Essentra said production of its cigarette filters grew strongly in the first quarter of 2021, with outsourcing contracts helping to push the filter part of its business to revenue growth of 10pc during that period. Total like-for-like revenue rose 1.4pc for the business, which also makes packaging. Shares added 4.5p to 303.5p.
Kainos fell, however, by 55p to £16.42 despite the software firm saying it recruited another more than 300 employees and contractors in the last year – bringing the total to 2,024 people – and after it revealed annual results are likely to be at the upper end of analyst expectations. It also said demand from new and existing customers remains strong even amid coronavirus-induced uncertainty.
Also weighing on markets was London Stock Exchange Group, which fell 200p to £77, making it the biggest loser on the benchmark and reversing a strong previous session. It came amid reports that influential adviser ISS is recommending investors object to a 25pc pay rise for chief executive David Schwimmer.