The FTSE 100 opened strongly this morning, amid renewed optimism about a global recovery and strong gains for US and Asian markets overnight, with the Dow closing at a new high-water mark for 2009.
Yesterday’s comments by Ben Bernanke, Chairman of the Federal Reserve, that the recession is coming to a close in the US, have clearly given investors around the world further confidence that the worst is over.
Contrast these with the comments by Mervyn King, Governor of the Bank of England, who struck a more cautious note, saying that the UK’s recovery will be 'slow and protracted'. We didn’t have to wait too long for the evidence of this, as the Office for National Statistics released relatively downbeat unemployment figures this morning. UK unemployment climbed to 2.47 million in the three months to July, taking the jobless rate to 7.9% – a 14-year high.
However, the FTSE proved resilient and by 10.15am (London time) was standing 60.80 points up at 5102.93, with the 5100 level breached for the first time in 12 months.
In retail, Next's results came in at the top end of forecasts, suggesting that it's not just the discount stores doing well at the moment. Its shares were up almost 3% at 10pm (London time). Simon Wolfson, chief executive of Next added a note of caution however: 'even if the economy technically comes out of recession, we can see no reason for the consumer outlook to significantly change through the rest of this year.'
Shares in Tullow Oil rose more than 4% this morning, buoyed by takeover talk and hopes of a new discovery offshore at its Venus well Sierra Leone.
Also going well today were miners, chief among them, copper miner, Xstrata, up 3.75% as RBS upgraded its recommendation to 'buy'.
This morning's weaker performing stocks were utilities Centrica, National Grid and Scottish & Southern Energy.
Gold prices extended their run past $1000 per ounce as central banks look set to increase the amount of the metal they store in national reserves.
In a busy schedule across the Atlantic this afternoon, look out for consumer price index and industrial prodution figures for August, released at 12.15pm and 2.15pm (London time) respectively.
