FTSE 100 breaks above 7,000 for first time since Covid crash | FTSE

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The FTSE 100 has risen above 7,000 for the first time since the Covid-19 pandemic triggered a collapse in global markets last year, amid rising hopes for the world economy after record growth in China.

The index of leading UK company shares rose by more than 30 points on Friday morning, or 0.5%, to hit 7,015, the highest level since late February 2020, when the first wave of Covid-19 sent shockwaves through the financial markets.

Mining companies and oil producers were in demand after China reported record growth in gross domestic product of 18.3% in the first quarter of the year, led by strong industrial output. Evraz, the natural resources firm, was the biggest riser on Friday morning, up more than 2%, while there were similar gains for BT, Ocado and International Airlines Group, the owner of British Airways.

The recovery in the FTSE 100 comes against a backdrop of accelerating growth in the world economy, fuelled by the coronavirus vaccine programme and the easing of restrictions in several large economies.

Travel companies were among the biggest risers on the FTSE 250 index, with the budget airline easyJet up by 2.2% and the holiday firm TUI gaining by 1.8%. WH Smith, which runs shops at airports and railway stations, was up by more than 4%.

Although having broken the psychologically important 7,000 barrier, the FTSE 100 remains more than 500 points below its level at the start of last year and has lagged behind several other major markets, including the Dow Jones Industrial Average in New York and Japan’s Nikkei.

The London market has more mining companies and oil firms that have suffered from weaker global demand during the Covid crisis up until now, and fewer big technology companies that have ridden the wave of an investment boom.

Russ Mould, the investment director at the Manchester-based stockbroker AJ Bell, said hitting 7,000 represented a “massive milestone” in the economic recovery from the Covid-19 pandemic.

“The market was understandably shocked as the coronavirus gripped the world but in true investor style it has quickly focused on the future and the ability for corporate earnings to recover,” he said.

The rebound in the FTSE 100 came after figures showed China’s economy expanded at its fastest pace on record in the first quarter – a sharp turnaround from its historic contraction caused by the coronavirus outbreak.

The world’s second-largest economy grew by 18.3% between January and March, buoyed by expansion in sectors such as industrial output and retail.

China’s was the only major economy to grow at all in 2020, supported by industrial activity and better-than-expected exports as the virus hit markets around the world.

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While the coronavirus first emerged in central China in late 2019, the country was also the quickest to bounce back after authorities imposed strict control measures and consumers stayed at home.

“The national economy made a good start,” the National Bureau of Statistics of China spokesperson, Liu Aihua, said on Friday.

Although the GDP figure was slightly below the forecasts of some economists, it still marked the fastest pace since records began three decades ago.

The sharp increase was partly down to “incomparable factors such as the low base figure of last year and increase of working days due to staff staying put during the lunar new year” holiday, Liu said.

However, she added that quarter-on-quarter growth had “demonstrated a steady recovery”.

There was strong growth across all sectors. In March, the country’s industrial output rose 14.1% year on year, bringing first-quarter growth to 24.5%, the official data showed. Retail sales surged 33.9% in the three months.

Liu, however, said that the international landscape still contained “high uncertainties”.

Hafta Ichi
Source: The Guardian
Keyword: FTSE 100 breaks above 7,000 for first time since Covid crash | FTSE

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