Miners buoy FTSE after 27.6% ‘massive’ rebound for UK plc11 Jun 2021 19:45
Miners buoy FTSE after 27.6% ‘massive’ rebound for UK plc
Mining stocks led the FTSE 100 higher on Friday, as a record jump in annual economic growth in April indicated the strengthening recovery from the coronavirus pandemic.
The blue-chip index rose 37 points, or 0.5%, to 7,125, its highest level in a month.
The Office for National Statistics reported UK economic output in April was 27.6% higher than a year before, when the country was in the depths of the first wave. GDP rose 2.3% in April alone, marking the fastest growth since last July, though the economy remains 3.7% smaller than in February 2020 before lockdown began.
Rupert Thompson, chief investment officer at wealth manager Kingswood, described the annual GDP growth figure as ‘massive’. ‘Today’s data confirm a rapid recovery in the UK is well underway and will fuel hopes that the economy will in a few months’ time have recovered all of its pandemic-related losses,’ he said.
‘Dig into the figures and it’s not a surprise to see the service sector playing a big part. With non-essential retail back in business, hairdressers brandishing scissors once again and the opportunity for all of us to enjoy a meal al-fresco…the boost [to the service sector] was a decent 3.4%,’ said Danni Hewson, finance analyst at stock broker AJ Bell.
‘But the feeling is the recovery is lumpy and delays in lifting restrictions could make it even more bumpy. The service sector is still far below its pre-pandemic levels and many in the hospitality sector are concerned about making it through the summer if social distancing continues to constrain sales.’
Miners led the gains among blue chips, with Fresnillo (FRES) rising 2.3% to 870p, Antofagasta (ANTO) strengthening 2.1% to £15.27 and Glencore (GLEN) up 2.3% to 327p. Healthcare was another strong area, with AstraZeneca (AZN) gaining 0.9% to £83.56.
Just Eat Takeaway (JET) was the leading laggard, slipping 2.8% to £64.41, after announcing yesterday that its acquisition of Grubhub would complete next week.
AJ Bell’s investment director Russ Mould pointed out the gains for UK stocks followed a sanguine reaction to yesterday’s higher-than-expected US inflation reading, with the S&P 500 closing up 0.5%.
‘Investors may have been nervous ahead of yesterday’s US inflation numbers but despite consumer prices rising at their fastest rate since 2008, and more than economists expected, shares were up,’ he said.
‘Perhaps central banks really have convinced the markets that any rise in inflation will be short-lived and will not force them to ramp up rates too rapidly.’
The mid-cap FTSE 250 index ticked up 52 points, or 0.2%, to 22,661. Sanne Group (SNN) soared 11.8% to 864p. After the asset manager received a fifth takeover offer set at 875p per share from private equity group Cinven, its board has decided to enter into talks having quickly rebuffed previous overtures.
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