The FTSE rose sharply on the open and continued climbing gradually across the course of the day, gaining a whopping 2.4% as the trade war relief rally continued and despite some worrying UK service sector stats.
Markets across the globe continued to bounce back as optimism increases that the US and China are willing to work towards avoiding an all-out trade war.
The FTSE was led 169 point higher by tech stocks and the heavyweight commodity sector; the miners gaining support from higher metal prices, on hopes that China, the world’s largest consumer of metals won’t be entering a trade war with the world’s largest economy, whilst oil stocks also jumped as crude recorded gains of 2% on reduced Sino – US tensions and a surprise drawdown on inventories.
UK tech stocks jumped over 4.5%, receiving a leg up from a sharp rally in tech stocks state side after Facebook CEO Mark Zuckerberg confirmed that the Cambridge Analytica scandal hadn’t noticeably impacted on Facebook user behaviour.
Part of the sharp selloff in Facebook had been due to concerns over reputational damage, particularly in the eyes of millennials, a group where Facebook has been struggling to remain current.
However, Zuckerberg’s comments as good as put those fears to bed, sending the stock higher. Although gains will be capped, as there is still the outstanding concern over regulatory control and how heavy-handed regulators will be, not just with Facebook but with tech firms across the board.
Volatility to remain
The Nasdaq was trading 0.9% higher, whilst the Dow and the S&P gained 300 points and 0.9% respectively.
We continue to see big swings in trading sessions as market sensitivity to bad news has increased significantly. Last year in the low volatility environment, bad news was quickly shrugged off.
That hasn’t been the case this year and we are not expecting a reversal back to the low volatility environment any time soon.
Pound to sub $1.39?
The pound sunk against the dollar after news that service sector activity grew at the slowest level since Brexit weighed on sentiment.
Snow disruptions negatively impacted an already struggling sector and the fear now is that any thoughts of a May rate rise from the Bank of England could be firmly pushed back to the Autumn.
The pound sunk below $1.40, down over 0.7%. Investors will now look towards the US non-farm payroll figures for further clues on direction. A strong reading from the US labour department’s report could send the pound tumbling sub $1.39.