FTSE 100 rises on Brexit vote anniversary as economic data shines

A man stands outside the London Stock Exchange in London
FTSE growth was powered by mining and oil stocks. Photo: Tim Ireland/Xinhua via Getty

The FTSE 100 (^FTSE) rose on Wednesday, outperforming European peers despite data pointing to bumper economic growth in the eurozone.

The FTSE was up 0.2% just before mid-morning in London, powered by mining and oil stocks. Shell (RDSB.L) topped the index with a gain of 2% and BP (BP.L) rallied 1.6%. Anglo American (AAL.L) registered a gain of 1.6%, while BHP (BHP.L) wasn't far behind. 

“The markets seem to be in consolidation mode on Wednesday after their see-saw start to the week,” said Russ Mould, investment director at AJ Bell.

Investors were focused on central banks and private-sector PMI data. In Britain, Wednesday marked the fifth anniversary of the Brexit vote, although this was more symbolic than market-moving.

IHS Markit published "flash" PMI data for Europe and the UK that showed continued strong momentum for the COVID recovery.

June marked one of the best months on record for the UK economy and the eurozone enjoyed its fastest expansion in 15 years.

"Firms reported a further rise in new orders, lifting them to their highest level since June 2006," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. "Moreover confidence in the outlook was at a record high, suggesting the firms now believe Europe the virus is in the past. This sentiment carried over into hiring, with the employment index rising for a fifth month in a row."

However, the German DAX (^GDAXI) and the French CAC (^FCHI) both lost ground in early trade despite opening higher. The DAX was down 0.4% by mid-morning and the CAC was a third of a percent lower.

PMI surveys in both the UK and eurozone warned businesses were facing increased supply chain issues, which are pushing up costs and threaten to slow recovery.

The Federal Reserve continues to dominate the conversation within market. The US central bank last week surprised investors by suggesting it could hike US interest rate twice in 2023. It sparked a sell-off of stocks and a rally for the dollar, as investors rejigged portfolios to reflect a sooner-than-expected end to the era of ultra-cheap money.

In testimony and speeches on Tuesday, Fed chair Jerome Powell and his colleagues sought to reassure investors that rate hikes are still a way off. The public comments helped stocks rally and cooled the dollar after a recent price surge. 

The Nasdaq (^IXIC) touched a new high on Tuesday and looked set to continue to climb on Wednesday. Futures (NQ=F) were up 0.1% in early trade. Elsewhere, Dow futures (YM=F) were up 0.2% and S&P 500 futures (ES=F) were 0.1% higher.

The pound was up 0.2% against the dollar (GBPUSD=X) in early trade on Wednesday. Cable reached $1.3975, its highest level since last Thursday when the Fed-driven rally for the dollar was gathering pace.

Fed board member Michelle Bowman and Federal Reserve Bank of Boston president Eric Rosengren are both due to give speeches later this afternoon.

Asian markets were mixed overnight, with tech stocks powering the Hong Kong Hang Seng (^HSI) 1.8% higher but gains muted elsewhere. Japan's Nikkei (^N225) closed flat after minutes from the Bank of Japan showed policymakers believed the global economy recovery could be faster than previously expected. It raises the prospect of the removal of stimulus and support measures, which will likely make capital more expensive.

Watch: Will interest rates stay low forever?

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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