FTSE ticks up as Yellen says US must ‘act big’ on stimulus

After a lacklustre start to the week the FTSE 100 perked up on former US Federal Reserve chair Janet Yellen’s call for the US to ‘act big’ on its Covid-19 recovery package.

The main market ticked 0.4% higher to 6,750 in early trading before scaling back to sit at 17 points, or 0.2%, higher at 6,738 as Yellen provided a reminder that $1.9tn (£1.4tn) of economic stimulus is coming.

In a testimony that the former Fed chair, and soon-to-be treasury secretary, will deliver to the Senate Finance Committee this evening, Yellen (pictured above) said: ‘Right now, with interest rates at historic lows, the smartest thing we can do is act big.

‘I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.’

Spreadex analyst Connor Campbell said her comments ‘reheated the markets hopes for the Joe Biden administration’s relief package’.

Campbell said how Yellen fares in the committee meeting will give the markets ‘an early indication of the resistance to the package, and what can be expected from the first few weeks of Biden’s tenure’.

‘Following a very quiet Monday, Yellen’s comments have acted as a reminder that stimulus is incoming, in some form, allowing for a more positive start to Tuesday’s trading,’ he said.

Aerospace engineer Rolls-Royce (RR) led the blue chips higher, gaining 4.4%, or 4p, to hit 108p, followed by HSBC (HSBA) which rose 2.5% to 412p, and medical equipment manufacturer Smith & Nephew (SN), which was up 2.1% at £15.99.

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The FTSE 250 climbed 0.3%, or 64 points, to 20,705, with the domestically-focused index helped by a 0.15% tick up in sterling, which was trading at $1.3604 against the dollar.

EasyJet (EZJ) led the mid-caps higher after reporting a 250% surge in summer holiday bookings as holidaymakers put their hopes on a recovery in the travel sector after the Covid-19 crisis. The budget airline was up 5.1%, or 41p, at 857p.

AJ Bell (AJB) jumped 4.5%, or 20p, to trade at 471p on the back of an upgrade from analyst Berenberg.

Real estate investment trust BMO Commercial Property (BCPT) enjoyed a gain of 3.8%, or 2p, to hit 78p.

In other investment trust news, Bankers (BNKR) gained 1% to £11.17 after reporting its net asset value grew 5.3% in the year to 31 October, against a 4.3% return from the MSCI World index. Since the financial year-end the Janus Henderson global fund’s NAV has advanced 13% in line with the total return of the benchmark.

HgCapital (HGT) rose 0.9%, or 2p, to 312p after the private equity trust announced it will invest £14.3m in Italian business management software company TeamSystem, which has held a minority stake in since 2015. 

Sequoia Economic Infrastructure Income (SEQI) firmed 0.7p to 108.5p after the debt fund held its interim dividend at 1.5625p per share.


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