FTSE lifted by Bailey speech and soaring oil prices

Traders in London were in confident spirits on Thursday as calming comments from the Governor of the Bank of England and a surge in oil prices kept stocks aloft throughout the session.

Andrew Bailey’s firm message to City leaders that rises in inflation will be “temporary” struck a positive note.

Meanwhile, the Chancellor Rishi Sunak’s speech laying out plans to boost the UK’S financial services sector also kept the mood positive in the City.

London’s top index closed 87.69 points, or 1,25%, higher at 7,125.16 on Thursday.

Joshua Mahoney, senior market analyst at IG, said: “The FTSE 100 has outperformed its peers today, as dovish tones from the Bank of England helped to drive the pound lower.

“Despite warnings from the Fed that rising prices could ultimately draw forward the tightening phase for monetary policy, BOE governor Andrew Bailey instead laid out a confident stance that higher prices would be temporary in nature.

“Energy prices also helped bolster sentiment in the commodity-heavy UK market, with Opec+ plans to raise production doing little to dent confidence as Brent hit a 32-month high.’’

The oil majors also benefited from speculation that an extension of Opec+ production deals could ensure control over energy prices.

The price of Brent crude increased by 1.41% to 75.67 dollars per barrel.

In mainland Europe, the other key markets also lifted. The German Dax increased by 0.47% and the French Cac moved 0.71% lower.

Across the Atlantic, the Wall Street markets were more mixed with inflation concerns shaken off briefly by the Dow Jones.

AJ Bell financial analyst Danni Hewson said however that good jobs figures were “setting off warning alarms for the tech heavy Nasdaq”.

Meanwhile, sterling was subdued as the UK’S manufacturing sector reported an easing in activity from record highs last month.

The pound was flat versus the US dollar at 1.378 and increased by 0.07% against the euro to 1.162.

In company news, JD Sports topped the FTSE 100 at the end of the session after the retailer increased its profit outlook after solid trading since shops reopened.

Britain’s biggest sportswear group said trading has been “particularly encouraging” in the UK since lockdown restrictions have eased, while most of its 3,300 stores worldwide are also now open apart from some across the Asia Pacific region.