FTSE 100 surges to highest level since February 2020

·3 min read
The FTSE surged after posting its best daily close since August the session before. Photo: Stephen Hird/Reuters

The FTSE 100 (^FTSE) climbed to a 20-month high on Friday, after posting its best daily close since August the session before, shrugging off fears that the global energy crunch will slow recovery.

London’s benchmark index closed 0.3% higher, its highest level since the end of February 2020, while the CAC (^FCHI) shot up 0.7% in Paris and the DAX (^GDAXI) was 0.8% higher in Frankfurt.

Oil stocks are driving the rally, as crude prices continue to rise amid energy crunch. Banks, airlines, and hospitality companies are also among the risers.

“After a choppy start to the week, equity markets appear to be leaning towards a narrative that companies can continue to grow profits, despite the combined pressures of higher energy prices, and supply chain disruptions,” Michael Hewson of CMC Markets said.

It came as UK job ads surged to a record high, jumping by 600,000 since the end of August. According to the Recruitment & Employment Confederation (REC), overall there were a record 2.29 million active job adverts posted in the week of 4-10 October.

Neil Carberry, chief executive of the REC, said: "It’s a good time to be looking for work right now – but this bounce-back phase will pass. As the sugar rush fades, future opportunities will be defined by the strength of our underlying economy – notably the extent to which there are capacity constraints on growth, and what progress firms can make on productivity."

Meanwhile, there were reports that new car sales in Europe slumped to their lowest level since September 1995 thanks to a global shortage of semiconductors. New car registrations slipped 23.1% to 718,598 last month compared to a year ago, the European Automobile Manufacturers' Association (ACEA) said.

Read more: Christmas supply crunch: Why cargo ships are clogging up ports

Across the pond, the S&P 500 (^GSPC) rose 0.6% after the index managed to post its best one-day gain since March, and the tech-heavy Nasdaq (^IXIC) rose 0.4%. The Dow Jones (^DJI) edged 0.8% higher by the time of the European close.

The gains on Wall Street were driven by a string of steady earnings announcements from US companies, which fuelled a wave of optimism despite the effects of rising energy prices, and supply chain bottlenecks.

It also followed an expected rise in retail sales last month, which climbed by 0.7%, beating expectations of a 0.2% fall. This was 13.9% stronger than a year ago, according to the latest figures from the US Commerce Department.

Andrew Hunter of Capital Economics said: "Despite reports of increasingly widespread shortages, spending on goods apparently held up relatively well, with furniture sales edging up by 0.2%, sporting & leisure goods sales jumping by 3.7%, clothing sales up by 1.1%.

"The latter may have been boosted by the reopening of most schools and some offices, however, which is probably a one-off."

Watch: Pent-up demand and supply shortage fuel oil price surge 

Elsewhere, Asian shares advanced on Friday, taking their cue from Wall Street which also supported risk-friendly currencies and hurt the safe-haven yen. However, concerns about the Chinese economy did cap gains.

In Japan, the Nikkei (^N225) rose 1.8% while Hang Seng (^HSI) jumped 1.3% after a one-day break, and the Shanghai Composite (000001.SS) was 0.4% higher.

Oil prices were also flirting with new multi-year highs, acting as a drag on growth in energy-importing markets in north Asia, but positive for energy-exporting markets in Southeast Asia.

Watch: Energy crisis could derail global economy says IEA

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