FTSE nears pre-pandemic 7,700 peak as miners surge

An oil price jump and bumper Christmas sales by retailers lift the FTSE 100 to within 150 points of its January 2020 peak before the pandemic struck.

The FTSE 100 hit a post-pandemic high this morning driven by mining stocks and a crop of bumper trading updates, as investors await inflation data from the US.

The blue-chip index rose to 7,545 in early trading, its highest level since January 2020, before retracing some of its steps to trade up 0.6%, or 42 points, at 7,533.

That came after lower-than-expected inflation in China opened the door for the government to provide more support to the slowing economy, while US Federal Reserve chair Jerome Powell confirmed the central bank will raise interest rates further if required to tame soaring prices, ahead of an inflation printout later today.

Neil Wilson, analyst at Markets.com, said: ‘The FTSE 100 had been tracing out a neat new range this year but this morning it’s managed to break free and make a new post-pandemic high at 7,545.

‘The positive march means 7,700 remains the target – the old pre-pandemic peak in January 2020.’

Bullish sentiment in markets was mirrored in commodities as the price of a barrel of West Texas Intermediate oil moved above $81 while Brent Crude neared $84 a barrel.

That benefited mining and energy majors, which have also been supported by shrinking oil inventories, as demand continues to grow despite the emergence of the omicron Covid-19 variant. Among FTSE 100 commodity stocks: 

  • BHP (BHP) was up 3.8%, or 86p, at £23.60;
  • Antofagasta (ANTO) was up 3.1%, or 42p, at £13.84;
  • Glencore (GLEN) was up 2.9%, or 11p, at 399p;
  • BP (BP) was up 2.1%, or 7p, at 377p;
  • and Royal Dutch Shell (RDSA) was up 1.6%, or 29p, at £17.88.

The blue-chip index also gained from a positive trading update from Sainsbury’s (SBRY), which reported a jump in profits following a bumper festive trading season. The shares were up 1.4% at 283p after the supermarket upped its full-year profit guidance by £60m to £720m.

Sophie Lund-Yates, analyst at Hargreaves Lansdown, said Sainsbury’s had taken on the discount supermarkets with success, following ‘massive investment in reducing prices, helping the supermarket up its market share’.

JD Sports (JD) gained 2% in early trading before falling back to a loss of 2%, changing hands at 214p, after a busy Christmas period led it to revise its full year profits upwards to £875m, ahead of market consensus of £810m.

The FTSE 250 was also boosted by strength among retailers, with the ‘mid-cap’ index trading up 0.5%, or 108 points, at 21,136. Homeware retailer Dunelm (DNLM) led the charge, up 7.1%, or 96p, at £14.36 after delivering a record quarter as Christmas sales boomed. Total sales were up by £46m compared to the previous period and the firm now expects profits before tax for the first half to be around £140m, up from £112m in the same period last year.

Among investment trusts, growth funds continued to recover after their New Year falls with Baillie Gifford US Growth (USA ), Baillie Gifford China Growth (BGCG ), Chrysalis Investments (CHRY ) rallying over 3%. CC Japan Income and Growth (CCJI ) added 3.6% to 156p in early trading, while BlackRock World Mining (BRWM ) reflected the strength in miners, up 2.5% at 615p. 

Third Point Investors (TPOU ) put on 2.2% to $27.60 from a 13% discount as the London-listed US hedge fund published details of how some investors can convert their shares into the underlying master fund at a narrower gap to their asset value.

 

JLEN Environmental Assets (JLEN ) slipped 1.3% to 102.5p from a 5% premium as it launched a share placing and offer at 101p.

Schroder UK Public Private (SUPP ) shed 2.7% to 32.4p on a 25% discount after the former Woodford Patient Capital announced a €12m (£10m) investment in Back Market, an online retailer of refurbished electronics.

 

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