Support for Greece Helps Stock Markets Climb
The outcomes of both an EU meeting and S&P's credit review on Greece helped restore market confidence on Tuesday
The FTSE 100 index added 35.0 points or 0.6% to 5,628.8, while the FTSE 250 index took on 57.6 points or 0.6% to 9,936.6.
Finance ministers from the 16 countries that have adopted the euro met on Monday and agreed to help Greece in the case that its own attempts to shore up its sovereign balance sheet fail, though no actual bail-out numbers were announced. Meanwhile, S&P said its review for a downgrade had come to an end, with the conclusion that the Greek government’s attempts to reduce its budget deficit support the agency’s current ratings.
European indices celebrated the news and Wall Street followed suit, though US equities performances were more subdued as investors awaited the outcome of the Federal Reserve’s monetary policy meeting. The Fed is widely expected to maintain interest rates near zero and the repeat previous comments that recent economic data suggest keeping rates near current lows for an extended period.
On the London Stock Exchange, oil producers enjoyed a strong session as the price of crude climbed to $81.5 per barrel amid US dollar weakness. Cairn Energy, Tullow Oil and Royal Dutch Shell each rose between 1.5% and 1.9%. Miners also rebounded after a weak start to the week on Monday, with Eurasian Natural Resources leading the blue-chip sector higher, up 2.9%.
A number of banks and broader financials also attracted buyers, thanks to improvements in market sentiment following news surrounding Greece. Barclays led the sector, 2.5% ahead, after also receiving a fillip from an upbeat Morgan Stanley analyst note. Interdealer broker ICAP, life insurer Standard Life and private equity investor 3i Group gained 2.2%, 1.6% and 1.5%, respectively.
But it was British Airways that soared to the top of the leaderboard, 4.5% stronger after reaching agreement with trade unions regarding the airline’s defined benefit pension schemes, though the deal will not prevent cabin crew from going ahead with a proposed strike later this month.