Mining and banking stocks lead FTSE rebound

by Jonathan Adams
FTSE-rebound

The FTSE 100 bounced back to record its strongest session in over a week, with precious metal, base metal miners and banks leading the gains

The FTSE 100 rebounded on Tuesday helped by miners and bank stocks after surging coronavirus cases and fears of an economic slowdown pushed the index to a two-month low in the previous session.

After dropping 0.25% in afternoon trading, the FTSE 100 bounced back to record its strongest session in over a week, up 0.5%, with precious metal, base metal miners and banks leading the gains.

This feels more like a dead cat bounce rather than a healthy rebound as all the arguments behind yesterday’s sell-off remain today, said Russ Mould, investment director at AJ Bell.

Banks climbed 1.1%, after Catherine Mann, who will soon join the Bank of England’s (BoE) rate-setting committee, joined interest-rate setter Jonathan Haskel to say cutting stimulus support too early was not the right option.

Two BoE monetary policy members last week said the time might be nearing for the BoE to rein in its huge stimulus programme.

The FTSE 100 has advanced 6.4% so far this year on record low interest rates. But a jump in inflation above the BoE’s 2% target in May, along with risks arising from a rise in local Covid infections have slowed the rise of the blue-chip index.

Inflation is still a major threat and there are plenty of reasons to expect the global economic recovery to slow down, Mould added.

The domestically-focused mid-cap index gained 0.8%.

Among stocks, global miner Anglo American gained 0.7% after it said its production increased by 20% in Q2, driven by strong diamond and platinum output.

Carnival Corp advanced 3.3% after it said it expected to have resumed cruises with 65% of its total fleet capacity by the end of 2021, betting that worries over a resurgence in coronavirus infections will not deter holidaymakers.

Unilever Plc declined 0.6% after Israel warned the consumer goods group of “severe consequences” from a decision by subsidiary Ben & Jerry’s to stop selling ice cream in Israeli-occupied territories, and urged U.S. states to invoke anti-boycott laws.



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