Key Points
- The FTSE 100 closed at a record high of 10,341.56, up 118.02 points or 1.2%, just shy of an intraday high of 10,345.48.
- FTSE 250 rose 172.69 points or 0.7% to 23,426.05, while AIM All-Share fell 3.19 points or 0.4% to 814.34.
- Cboe UK 100 up 1.3% at 1,032.05; Cboe UK 250 up 0.6% at 20,643.08; Cboe UK Small Companies down slightly at 18,694.32.
- Metals selloff eased after sharp declines: gold down to USD4,696.11/oz from USD5,003.82 (over 6% drop); silver fell further 6.4%; copper eased 1.3% to around $5.5/lb.
- Miners mixed: Endeavour Mining down 2.7% or 112p to 4,110p; Fresnillo down 0.9% or 34p to 3,668p; Antofagasta down 0.2%; Anglo American up 1.2% on Citi upgrade; Rio Tinto and Anglo American up over 0.5%, Glencore flat.
- Top risers: JD Sports Fashion up 6.11% to 86.78p; AstraZeneca up 3.24% to 14,040p; GSK up 2.58% to 1,925p; InterContinental Hotels up 4.15% to 140.40p.
- Defensive stocks led gains amid volatility: Unilever up 1.1-2%; British American Tobacco up 1.5%; Compass Group up 2.79%.
- Positive UK data: Nationwide house prices up 1.0% y/y in January (from 0.6%); S&P Global manufacturing PMI at 51.8 (17-month high); business confidence at eight-month high.
- Analyst views: JPMorgan sees gold selloff as buying opportunity, remains bullish; Deutsche Bank targets USD6,000/oz gold; Barclays notes gold fair value USD4,000 but premium durable; Morgan Stanley links volatility to Kevin Warsh Fed Chair nomination.
- Oil down: Brent at USD66.03/bbl from USD69.76, BP and Shell down 0.4-0.5%.
- Broader context: Optimism in UK and US manufacturing; BoE expected to hold rates at 3.75% Thursday.
As reported by Jeremy Cutler of Alliance News via shareprices.com, the index touched an intraday peak of 10,345.48 amid optimism in manufacturing sectors on both sides of the Atlantic. Defensive heavyweights and financials drove the rebound, offsetting losses in commodity-linked shares, while UK economic data provided further support.
What drove the FTSE 100 to its record close?
The FTSE 100’s resilience came despite a turbulent start triggered by plunging metals prices. Gold tumbled to USD4,696.11 per ounce from USD5,003.82 late Friday, marking a sharp reversal after record highs last week. Silver dropped a further 6.4% on Monday, while copper eased 1.3% to around USD5.5 per pound, extending losses from Friday’s steep declines. As noted in Trading Economics reports, metals prices pared earlier steep falls, allowing some stabilization in mining stocks.
European peers also advanced, with Paris’s CAC 40 up 0.7% and Frankfurt’s DAX 40 up 1.1%. In the US, the Dow Jones rose 0.9%, S&P 500 0.5%, and Nasdaq 0.6%, bolstered by strong manufacturing PMIs: ISM at 52.6 (first expansion in 12 months) and S&P Global beating estimates. TD Economics described the ISM report as “solid” but cautioned on persistent trade uncertainties.
Tom Stevenson, investment director at Fidelity International, highlighted the precious metals “rout” creating a nervous backdrop ahead of central bank decisions. “Both the Bank of England and European Central Bank announce rate decisions on Thursday. Both are expected to leave rates on hold,” he noted. The BoE is forecast to hold at 3.75%, with focus on wage growth, though signals for later cuts may emerge due to budget policies and a stronger pound.
How did metals volatility impact miners?
Mining stocks bore the brunt of the commodities rout but showed mixed results as the selloff eased. Endeavour Mining fell 2.7% or 112.00 pence to 4,110.00p, while Fresnillo dropped 0.9% or 34.00p to 3,668.00p, and Antofagasta declined 0.2%. Earlier intraday, losses were steeper: Endeavour down 7.4%, Fresnillo 7.6%, Antofagasta 5.4%.
Anglo American bucked the trend, rising 1.2%, after Citi upgraded it to ‘buy’ from ‘neutral’. As per Citi analysts via Alliance News, the proposed merger with Teck Resources to form AngloTeck is “transformative”. Rio Tinto and Anglo American ended over 0.5% higher, Glencore flat, per Trading Economics. The AIM All-Share, with heavier mining exposure, closed down 0.4% at 814.34.
Strategists weighed in on the volatility. JPMorgan attributed the selloff partly to derivatives activity exacerbating rebalancing effects but views the pullback “as an opportunity and remain firmly bullish long term on gold”. Deutsche Bank Research reiterated its USD6,000 per ounce gold target. Barclays strategists stated: “The volatility has been extreme, positioning is stretched, and short term technicals look overheated – but it seems that the broader drivers behind the move remain powerful and persistent.” They peg gold’s fair value at USD4,000/oz, with a durable premium due to inflation, central bank demand, and policy concerns.
Morgan Stanley linked volatility to Friday’s nomination of Kevin Warsh as Federal Reserve Chair. “Warsh’s appointment is aimed at ‘restoring market confidence following a parabolic rise in precious metals and a rapid weakening in the US dollar,'” the broker said, noting his hawkish reputation as a “credibility anchor”.
Oil prices also slid, with Brent at USD66.03 per barrel from USD69.76, dragging BP down 0.4% and Shell 0.5%.
Which sectors and stocks led the gains?
Defensive and financial stocks powered the FTSE’s record run. AstraZeneca surged 3.24% or 440.00p to 14,040.00p after EU approval recommendation for Imfinzi in gastric cancers and New York trading debut. GSK rose 2.58% or 48.50p to 1,925.00p ahead of Q4 results Wednesday.
Other top risers included JD Sports Fashion up 6.11% or 5.00p to 86.78p; InterContinental Hotels Group up 4.15% or 5.60p to 140.40p; International Consolidated Airlines Group up 3.59% or 15.00p to 433.20p; Beazley up 3.09% or 35.00p to 1,168.00p. Compass Group added 2.79%, Unilever over 2%, British American Tobacco 1.5%.
Banks advanced ahead of the BoE meeting, and defence stocks rose on UK-EU cooperation signals, though BAE Systems fell 52.00p to 1,922.00p. For professionals navigating such volatile markets, Financial Modelling courses can sharpen skills in analysing index drivers and commodity impacts.
What UK economic data boosted sentiment?
Positive domestic indicators underpinned the rally. The S&P Global UK manufacturing PMI jumped to 51.8 in January, a 17-month high from 50.6, with job cuts at weakest since losses began 15 months ago. UK business optimism hit pre-2024 autumn budget levels, with 58% of manufacturers expecting output growth, citing market confidence and lower geopolitical risks.
Nationwide reported house prices up 1.0% year-on-year in January from 0.6%, beating 0.7% consensus. “UK data supported the index, with Nationwide showing house prices rising 0.3% in January, business confidence hitting an eight-month high, and manufacturing activity continuing to expand,” per Trading Economics.
Currency moves: Pound at USD1.3651 from 1.3719; euro at USD1.1804 from 1.1881; dollar at JPY155.52 from 154.30.
What lies ahead for markets?
Upcoming events include BoE and ECB decisions Thursday, Australia’s rate call overnight Tuesday, Spanish unemployment, UK grocery data, and corporate results from Alumasc and Filtronic. Yields rose: US 10-year at 4.28% from 4.25%, 30-year at 4.90% from 4.85%.