The markets in London were on firmer footing on Monday, with both the FTSE 100 and FTSE 250 making slight gains after a week of sharp losses.
The benchmark FTSE 100 index added 37 points, or 0.7%, to close at 5,304. This follows a week of sharp losses, where the index fell by 5.5%. The FTSE 250 added just 4 points by the close of the day, closing at 10,436. The mid-cap index dropped by 5.3% in the previous week.
Market observers are attributing Monday’s more positive market mood to Chinese policymakers. The markets were “buoyed no doubt in part by a more positive session in Asia that followed comments from the Chinese leadership which hinted strongly at further stimulus for the faltering economy there,” said Darren Sinden, senior sales trader at Silverwind Securities. “However the G8 conference at the weekend offered little more than platitudes as far as the current crisis in Greece and Spain is concerned and until we find some resolution to problems in Athens it will be hard imagine a sustained recovery in the FTSE.”
The UK mining sector received a boost from the comments out of China, since a strong Chinese economy translates into strong demand for resources.
“The mining sector has lost as much as 29% from the highs of early February to Friday’s lows, which marks a significant downturn in demand for mining stocks,” said Joshua Raymond, chief market strategist at City Index. “As such, some bargain hunting is to be expected but we are going to need to see some significant buying before investors can be convinced that a change in near term bearish trend for miners could bear fruition,” he said.
The best performer amongst the large-caps on Monday was Vedanta Resources (VED). Shares in the mining company climbed by over 5%.
In the US, Facebook (FB) was again grabbing headlines as shares dropped by more than 10% after they debuted on the market on Friday.
Looking to the week ahead, the markets are expecting a number of important economic data points to be released. “There’s nothing in the way of any meaningful economic data out today, but things get a little more interesting as the week goes on,” said Simon Denham, CEO at Capital Spreads. “Inflation numbers are out tomorrow, then retail sales and the BOE minutes on Wednesday, and then the second reading of Q1 GDP on Thursday.”