The FTSE 100 has surged to a new record high as investors welcome the announcement President Trump’s planned trade war with China is “on hold”.
A series of factors helped push values up at the open on Monday – the index rising 0.5% and comfortably above the 7,800 point barrier in early trading which took a lead from Asia.
Chief among them, analysts said, was the US decision to postpone $150bn of threatened tariffs on Chinese imports amid apparent progress in negotiations between Washington and Beijing.
Further evidence of progress in securing a new government in Italy, after months of talks, was cited too.
Image: US Treasury Secretary Steven Mnuchin said the trade war was ‘on hold’
While the announcement signalled greater appetite for risk on stock markets, Brent crude oil prices – which hit $80 a barrel for the first time in three-and-a-half years last week – also rose.
A stronger dollar and newspaper speculation of a UK General Election in the autumn took its toll on the pound, which slid 0.5% to just below $1.34.
A weaker sterling since the Brexit vote has tended to boost share values because it bolsters the earnings of the FTSE 100’s dollar-earning constituent companies.
The market had hit a new record closing high last Thursday – defying expectations of market experts earlier this year who predicted tougher times for the index amid a fog of Brexit uncertainty and a slowing economy.
The prospect of a damaging trade war was a major factor in the market sinking below the 7,000 point mark in March.
Naeem Aslam, chief market analyst at ThinkMarkets, warned other events beyond the trade dispute could dampen sentiment ahead.
He wrote: “Both sides have retracted from their threatening behaviour and the US has suspended $150bn worth of tariffs on Chinese imports.
“Let’s see if the US hopes about China buying a substantial amount of US goods become true.
“European markets are picking up the momentum where they left off last week. It is a green day across markets – at least for now.
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“However, Italian markets remain a concern for us. Last week, Italian markets experienced more selling pressure because of the unrest in the political situation of the country.
“A new populist coalition government is the last thing that you want to see after the Brexit mess.”