Good morning. The FTSE 100 is set to hold onto yesterday’s gains after traders reversed gear to push the index 1.7pc higher, close to 7,000 points, after a disastrous start to the week in which fears that rising delta variant cases could derail the global recovery led stock markets to plunge. Europe will take its cue from a rally in Asian stocks overnight, with their eyes firmly set on the European Central Bank’s 11.45am meeting, at which it is expected to announce a more flexible strategy to deal with inflation. Traders will also have their eyes peeled for any signal on the ECB’s rate of asset purchases.
5 things to start your day
1) Sunak to resist spending spree as debt interest hits record: Treasury borrows another £22.8bn in June and while rates remain low, rising inflation means costs of servicing debt are increasing.
2) Elon Musk to buy nickel for Tesla batteries from BHP: Elon Musk’s $630bn (£460bn) company has signed a supply deal with BHP’s Nickel West mine and refinery in Western Australia.
3) Electric cars cheaper than petrol to run – if you do enough miles: Despite being outright more expensive, battery motoring can deliver big savings – if drivers cover enough miles.
4) Branson’s Pendolinos trains get £117m overhaul: First class seating will be replaced with more space standard class and a restaurant of sorts will return.
5) Signed-for deliveries under threat in Royal Mail shake-up: Former Ocado executive Simon Thompson is keeping all options open as he launches a review of Royal Mail services.
What happened overnight
Asian stocks rallied on Thursday, bonds nursed losses and oil held on to sharp gains as investors seemed to set aside virus jitters for now and looked ahead to the European Central Bank for reassurance that policy support will continue for some time.
MSCI’s broadest index of Asia-Pacific shares outside Japan followed Wall Street higher and rose one per cent with broad gains from Sydney to Seoul and Hong Kong. Japanese markets are closed until Monday.
There was no obvious catalyst for the recent rebound in stocks, or the drawdown on Friday and Monday, though a study on Wednesday showed both Pfizer and AstraZeneca vaccines were effective against the delta coronavirus variant.
Unlike Wall Street, most Asian indexes struggled to recoup early week losses as Asia contends with burgeoning outbreaks in unvaccinated populations and as nerves persist around China’s regulatory crackdown on technology firms.
Shares in heavily indebted Chinese property developer Evergrande rebounded about 11pc in Hong Kong after it said it had resolved legal disputes with a lender.
Coming up today
- Corporate: Mulberry (Full year); Breedon, Centrica, Franchise Brands, Howden Joinery, moneysupermarket.com, Unilever (Interim); AJ Bell, Britvic, 3i Group, SSE, Workspace, Virgin Wines, Countryside Properties, Diploma (Trading update)
- Economics: ECB interest rate decision; consumer confidence (EU); jobless claims (US)
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