FTSE hits 9-month high on US stimulus relief and Brexit deal

Kumutha Ramanathan
·3-min read

Watch: FTSE higher on stimulus hopes, Brexit optimism

London’s FTSE (^FTSE) reached a 9-month high on Tuesday, soaring on its first day back since the Brexit deal was brokered last week.

The index and its European peers were largely driven higher after the US House of Representatives approved an increase in stimulus payments to help the country get back on its feet in the wake of the COVID-19 pandemic.

The FTSE 100 (^FTSE) closed 1.6% higher in London, with only UK banking stocks lower as the Brexit deal didn’t clarify how the financial services sector would be impacted when the UK exits the EU. Germany’s DAX (^GDAXI) fell slightly 0.1% in Frankfurt, while the CAC 40 (^FCHI) headed higher 0.5% in Paris.

US markets made modest moves at the end of the London trading session. The S&P (^GSPC) was up 0.1%. Dow Jones (^DJI) was flat and the Nasdaq (^IXIC) fell 0.2%.

The outside of the London Stock Exchange building is seen. Photo: Toby Melville/Reuters
The outside of the London Stock Exchange building is seen. Photo: Toby Melville/Reuters

Britain secured a narrow Brexit trade deal with the EU on Thursday, just seven days before it was due to exit one of the world’s largest trading blocs.

The US COVID-19 relief package has yet to pass, but president Donald Trump’s decision to approve the $2.3tn (£1.68tn) deal on Sunday sent major shares to record highs on Monday.

“With the Brexit... and the US stimulus deal now in the rear-view mirror, there is a sense of relief that we have avoided the respective worst-case scenarios,” said Stephen Innes, chief global market strategist at Axi, a broker.

READ MORE: British Airways-owner IAG worst FTSE 100 stock of 2020

In the UK, NHS England’s chief executive Sir Simon Stevens said on Monday that health workers are “back in the eye of the storm” as cases rise at the end of the “toughest year.” He said he expected the NHS to have offered vaccinations to all vulnerable people by late spring.

WATCH: Trump signs COVID-19 relief bill

In the US, the total number of COVID-19 cases topped 19 million, according to data from John Hopkins University. The nation’s death toll rose by more than 1,200 on Sunday, bringing the total to more than 333,000.

“The new coronavirus cases are surging to a record level once again, representing the threat of further regional lockdowns,” said Naeem Aslam, chief market analyst at AvaTrade.

“Suppose the lawmakers decide to take any such actions, and a lockdown is re-introduced. In that case, it is highly like to leave an adverse influence on the US economy and dent the consumer and investor sentiment.”

Asian markets were largely positive over the US stimulus deal news. Japan’s Nikkei (^N225) gained 2.7% at market close, the Hong Kong Hang Seng (^HSI) was up 1%, and the Shanghai Composite (000001.SS) was down 0.5% at market close. South Korea’s KOSPI (^KS11) headed up 0.4%.