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FTSE closes in the green and Wall Street rises on positive US and China data

·4-min read
The FTSE 100 was in the green on Monday as investors shrug off recession fears. Photo: Dominic Lipinski/PA Media
The FTSE 100 was in the green on Monday as investors shrug off recession fears. Photo: Dominic Lipinski/PA Media

European stocks started the week in the green as strong Chinese export growth numbers and last week’s upbeat US job figures helped lift traders's sentiment.

In London, the FTSE 100 (^FTSE) hovered near a two-month high on Monday, up 0.8% after the closing bell, while the CAC (^FCHI) jumped 1.1% in Paris and the DAX (^GDAXI) rose 1% in Frankfurt.

The commodity-heavy bluechip index has outperformed its global peers this year after gaining 1.2%, boosted by higher commodity prices and banks that have benefited from rising interest rates.

Oil giants BP (BP.L) and Shell (SHEL.L) gained 0.5% and 0.4% respectively. Miners Glencore (GLEN.L) and Anglo American (AAL.L) were also up, tracking stronger metal and iron ore prices, while rate-sensitive banks also climbed. And Hargreaves Lansdown (HL.L) was the biggest riser, gaining as much as 8.2%.

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"The new week has again started with gains, with short-covering and speculative buying providing a foundation for more upside," said Chris Beauchamp, chief market analyst at online trading platform IG.

"Everyone continues to look for the beginning of the next leg lower, but it stubbornly refuses to begin. Friday’s jobs report seemed to provide the spark, but the new week has begun with gains as investors continue to take the positive view."

Crude prices jumped on Monday following strong US jobs data and Chinese exports numbers that picked up unexpectedly in July.

International benchmark, Brent (BZ=F) was 1.7% lower after gains in early trade, while US light crude (CL=F) fell 1.8% at the time of writing.

Last week, the Bank of England warned of a prolonged recession in the UK after delivering its biggest interest rate lift in since 1997 to combat runaway inflation, which it predicts will hit 13% later this year.

Threadneedle Street hiked rates for the sixth consecutive month by 50 basis points from 1.25% to 1.75% — their highest level since December 2008.

Read more: Bank of England announces biggest interest rate hike in 27 years

Across the Atlantic, US benchmarks opened in the green on Monday after a surprisingly strong jobs report cast doubt on the Fed cooling its pace of rate hikes.

Wall Street’s S&P 500 (^GSPC) added 25.38 points, or 0.6%, to 4170.57. The tech-heavy Nasdaq (^IXIC) rose 0.8%, while the Dow Jones (^DJI) advanced 0.7% at London's close.

Figures from the Labor Department on Friday showed non-farm payrolls jumped 528,000 last month, beating estimates. It was the largest increase in five months, marking a recovery to pre-pandemic levels.

The unemployment rate fell to 3.5%, matching a five-decade low. Wage growth accelerated and the labour force participation rate eased.

Michael Hewson, chief market analyst at CMC Markets, said: "Coming as it did against a backdrop of hawkish pushback from some senior Fed officials earlier in the week, and again at the weekend, the resilience of stocks is even more remarkable given the darkening economic outlook.

"While it is true that the US labour market looks strong, Friday’s data is very much rear-view mirror stuff, and even though it shows that the US economy remains resilient it doesn’t necessarily mean that the glass is half full."

Asian stocks were mixed overnight with the Nikkei (^N225) down 0.3% in Japan, while the Hang Seng (^HSI) fell 0.8% in Hong Kong and the Shanghai Composite (000001.SS) gained 0.3%.

It comes after China’s surprisingly strong export growth last month lifted its trade surplus, providing some economic support, but it is still has work to do to get its fragile recovery on track as the global economy slows.

Chinese trade balance climbed to about $101bn in July, while exports in dollar terms grew 18% from a year earlier, up on economists’ estimates of a 14.1% gain.

Watch: How does inflation affect interest rates?