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Shares rise as sentiment recovers Shares rise as 'hard hit' stocks rally
(about 1 hour later)
Shares in London have risen about 1.7%, while sterling has recovered slightly from a 31-year low. Shares in London have risen about 1.4%, while sterling has recovered slightly from a 31-year low.
The FTSE 100 share index was up 112.31 points in morning trade to 6,575.90. The FTSE 100 share index was up 88 points in morning trade to 6,551.46.
The pound rose 0.40% against the dollar to $1.2982 and was 0.54% higher against the euro at €1.1710. The pound rose 0.7% against the dollar to go back above $1.30 and was 0.9% higher against the euro at €1.1754.
Investors were reassured by strong economic data from the US on Wednesday and by expectations that interest rates will remain low for quite some time to come. Property shares, which have been among the worst hit since the Brexit result, led the FTSE 100 higher after figures showing house prices increased in June.
US service sector hit a seven-month high in June as new orders surged and companies hired more. After three days of declines, the recovery is "being led by a rebound in the sectors that have been hit the hardest over the past few days", said Michael Hewson of CMC Markets.
House builders Taylor Wimpey and Persimmon were two of the biggest winners on the FTSE on Thursday morning. Their shares increased 7% and 6% respectively, but are still more than 30% lower since the referendum.
Analysts also pointed to strong economic data from the US on Wednesday and expectations that interest rates will remain low in the coming months.
"Following on from Mark Carney's strong hint last week that rates will be cut this summer, financial markets are now pricing in a 78% chance that this will happen next Thursday," said Ben Brettell, a senior economist at Hargreaves Lansdown.
On edge
Despite a sharp sell-off after the Brexit vote, the FTSE 100 is up more than 3% since its close on 23 June. However, it is down around 10% in dollar terms as the slump in sterling to a 31-year low has reduced the dollar value of the market.Despite a sharp sell-off after the Brexit vote, the FTSE 100 is up more than 3% since its close on 23 June. However, it is down around 10% in dollar terms as the slump in sterling to a 31-year low has reduced the dollar value of the market.
Investors on edge
While there were some tentative signs of recovery in riskier assets, investors were still on edge over the fallout from the Brexit vote which helped extend a rally in gold prices.While there were some tentative signs of recovery in riskier assets, investors were still on edge over the fallout from the Brexit vote which helped extend a rally in gold prices.
The precious metal is trading near its highest price in more than two years. Gold tends to perform well when investors are worried about the performance of riskier assets like equities.The precious metal is trading near its highest price in more than two years. Gold tends to perform well when investors are worried about the performance of riskier assets like equities.
In a busy company announcement session, shares in Marks and Spencer were down 0.9% after it reported a steep fall in sales. In a busy company announcement session, shares in Marks and Spencer were down 1.4% after it reported a steep fall in sales.
AB Foods, owners of Primark, saw shares rise 8.8% to be the biggest gainer on the FTSE.AB Foods, owners of Primark, saw shares rise 8.8% to be the biggest gainer on the FTSE.
It said it was sticking to plans to expand its Primark chain across Europe and the US, and was optimistic about continued growth despite uncertainty created by Brexit.It said it was sticking to plans to expand its Primark chain across Europe and the US, and was optimistic about continued growth despite uncertainty created by Brexit.
Sports Direct shares rose 10% despite a fall of 15% in annual profits as a result of bad publicity about working conditions. Sports Direct shares rose 3% despite bad publicity about the retailer's working conditions prompting a heavy fall in annual profits.
In early trading it was among the top gainers on Britain's FTSE 250 index of mid-cap companies, which increased 1.4% to 15,886.16 points.
Fed cautiousFed cautious
Late on Wednesday, the latest Federal Reserve minutes were released, showing that prospects of an interest rate hike have diminished.Late on Wednesday, the latest Federal Reserve minutes were released, showing that prospects of an interest rate hike have diminished.
This soothed investors who had feared that a rise in interest rates may hinder prospects for economic growth.This soothed investors who had feared that a rise in interest rates may hinder prospects for economic growth.
The US central bank's last meeting in June took place before the UK's EU referendum.The US central bank's last meeting in June took place before the UK's EU referendum.
However, policymakers were concerned the vote would heighten global market uncertainty and potentially hurt the US economic outlook.However, policymakers were concerned the vote would heighten global market uncertainty and potentially hurt the US economic outlook.