Market jitters were soothed on Tuesday by a more upbeat assessment on the prospects for a global recovery from the OECD
(PA)
The FTSE 100 rose 0.6 per cent on Tuesday morning as fears eased about a sell-off of government debt and prospects for the global economy brightened.
The blue-chip index of leading shares hit 6,753.97 by mid-morning, up 33 points on Monday’s close. Asset manager M&G topped the index with a 5.6 per cent gain after reporting stronger than expected results.
In the currency markets, sterling rose to a two-week high against the euro and also gained versus the dollar.
The pound has been boosted by a speedy vaccination rollout and some cautiously optimistic assessments on the UK economy.
In recent days, investors have been spooked by the prospect of rising inflation as the economy picks up. Those fears have led to a sell-off of government bonds.
Market jitters were soothed on Tuesday by a more upbeat assessment on the prospects for a global recovery from the Organisation for Economic Co-operation and Development (OECD).
“Vaccine rollout, although uneven, is gaining momentum and government stimulus, particularly in the United States, is likely to provide a major boost to economic activity,” the Paris-based club of wealthy countries said in its latest outlook.
In a speech to the Resolution Foundation, Bank of England governor Andrew played down fears of a large jump in inflation, which his chief economist Andy Haldane and some investors see as a risk.
More than 22 million people have received the first dose of a Covid-19 vaccine in the UK and the number of daily deaths has dipped below 100 for the first time since October.
“The comments that BoE Governor Bailey made yesterday have made the newspaper headlines this morning and are therefore probably having an extended impact on the pound,” said Jane Foley, Head of FX Strategy at Rabobank.
In early London trading, the pound hit 85.57 p against the euro. It has gained more than 4 per cent versus the single currency so far this year.
Versus the dollar, the pound rose 0.5 per cent to $ 1.3892.
Janet Yellen, US Treasury secretary, said on Monday that Joe Biden’s $ 1.9 trillion stimulus package would provide enough resources to fuel a “very strong” US economic recovery.
Oil prices fell after a spike on Monday due to fears of a supply disruption in Saudi Arabia after a drone attack on its export facilities.
Brent crude futures for May fell by 0.7 per cent to $ 67.78 a barrel while the key US benchmark, West Texas Intermediate (WTI), for April delivery dipped 0.8 per cent to $ 65.53.
Gold rose 0.7 per cent to $ 1,692.21 an ounce.
Asian stock markets recovered from early losses as Japan’s Nikkei rose 1 per cent on Tuesday afternoon, while MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1 per cent higher.
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