A rush of more than 4% saw the FTSE 100 index close comfortably higher than the 4,000-point mark that had been eluding investors for the past six weeks. Just one month ago this psychological level seemed a distant dream but London’s leading index has gained 18% since then, fuelled by economic data indicating an end to the downfall and today’s G20 news.
The FTSE 100 index closed up 4.3% or 169.4 points at 4,125.0, with just 11 of its constituents in the red. The FTSE 250 index tracked this performance, adding 4.2% or 275.1 points to 6,816.1.
The fuel behind index gains—not just in the UK but worldwide—was the G20 summit in London, which this afternoon announced a trillion-dollar deal to fight the economic downturn. Prior to the announcement, global equity markets had already reacted positively to hopes of a united plan of action but the confirmed figures turned out to be even higher than most analysts’ expectations. The International Monetary Fund’s resources are to be boosted by $500 billion, and the group of 20 also agreed a trade finance package worth $250 billion and assigned a further $250 billion of IMF reserve units to all members. In addition, they signed a deal to blacklist tax havens and tighten regulation of hedge funds and credit rating agencies—issues that had been particularly strongly rallied for by France and Germany.
Across the pond, the US Financial Accounting Standards board today announced it will relax accounting rules that have been taking bites out of banks’ balance sheets in the past, and the latest round of economic data from both sides of the Atlantic offered reasons to cheer. To read more on today’s data reports, click here.
It’s easy to get carried away, analysts warned however. Though data may be signalling the potential end to the economic downturn and leaders of the world’s most powerful nations may have sealed a deal to confront the state of the global economy, whichever way you look at it, it’s still just that: a state.
Still, with confirmation of the G20 action plan hitting the headlines just as markets were closing, financial stocks and commodities issues were among the top FTSE 100 risers by end of play. The top blue-chip performer was miners Kazakhmys, which surged 17.4% ahead to 459.5p, followed by the rest of the sector as commodity prices headed skywards. Not a single FTSE 100-listed mining company gained less than 6% today. Among the financials, banks Standard Chartered, Royal Bank of Scotland and HSBC all added over 10% each, while asset manager Man Group jumped 16.8% to 254.25p and interdealer broker ICAP took on 11.1% to 345.25p.
With very few blue-chips in the red, the casualty list was dominated by utility providers—their defensive qualities out of favour in such a strong market. Scottish & Southern Energy, Severn Trent, Centrica and Pennon all slipped between 0.7% and 2.0% lower. Meanwhile, the worst performance came from gold miner Randgold Resources, although it still only lost 4.5% to end the day at 3,708p following a strong run.
With the G20 and economic reports hogging the headlines, company-specific news was overlooked somewhat, amongst which mid-cap Taylor Wimpey was a clear winner following a press report that it has managed to reach a deal to restructure its debt. Shares in the housebuilder swelled by 23.4% to 29p. Fellow second-liner Tate & Lyle added 6.7% to 276.5p as investors shrugged off news the sugar producer sees full-year results below its previous guidance and instead applauded the group’s debt situation and commitment to its dividend.
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