Miners and bank stocks helped the FTSE 100 rebound after surging coronavirus cases and fears of an economic slowdown pushed the index to a two-month low in the previous session. After falling as much as 0.25% in trading, the FTSE 100 sprung back to record its strongest session in more than a week.
Russ Mould, investment director at AJ Bell said that this feels more like a dead cat bounce rather than a healthy rebound as all the arguments behind yesterday’s sell-off remain today. Banks jumped 1.1%, after Catherine Mann, a top economist who will soon join the Bank of England’s rate-setting committee, joined interest-rate setter Jonathan Haskel to say cutting stimulus support too early was not the right option. Two BoE monetary policy members stated that the time might be nearing for the BoE to rein in its huge stimulus programme.
The FTSE 100 has gained 6.4% so far this year. But a jump in inflation above the BoE’s 2% target in May, coupled with risks arising from an increase in local coronavirus infections. And that have slowed the rise of the blue-chip index. Mould added that the inflation is still a major threat and there are plenty of reasons to expect the global economic recovery to slow down. FTSE 100 set for monthly decline since January over inflation. The domestically-focused mid-cap index rose 0.8%.
Among stocks, global miner Anglo American rose 0.7%. Carnival Corp gained 3.3%. Unilever Plc shed 0.6% after Israel warned the consumer goods group of severe consequences from a decision by subsidiary Ben & Jerry’s. to stop selling ice cream in Israeli-occupied territories, and urged U.S. states to invoke anti-boycott laws.
