The FTSE has continued to rally this morning, buoyed by a strong performance on Wall Street overnight and positive results in Asian markets.
The London stock index was up 13 per cent, edging back up towards the 7,600 level, led by gains from Shire pharmaceutical after it agreed to a $62bn (£45.9bn) takeover from Japanese company Takeda.
Overnight, US markets closed higher, with the tech-heavy Nasdaq index climbing 0.77 per cent, while the Dow Jones and S&P 500 gained 0.39 per cent and 0.35 per cent respectively.
However, Marios Hadjikyriacos, investment analyst at XM, cautioned that markets may remain volatile amidst geopolitical tensions:
“It should be noted, though, that all these indices gave back some of their early gains yesterday following a tweet from US President Trump that he will announce his decision on the fate of the Iran nuclear deal today,” said Hadjikyriacos.
In Asia overnight stocks also rallied, with the Nikkei gaining 0.18 per cent and Hong Kongs Hang Seng surging 1.28 per cent.
Early this morning the German DAX and French CAC indexes were both down, however, according to Rebecca OKeeffe, head of investment at Interactive Investor, these markets may be “playing a waiting game” ahead of President Trumps announcement
“Everyone has known for months that Trump was adamantly opposed to the deal, but now we will at last discover whether he is prepared to abandon multilateral western diplomacy in favour of a return to unilateral US sanctions,” said OKeeffe
“However, while oil is the focus of attention for markets, the prospect of increasing tensions in the region should President Trump follow through on his threats is also a concern, not least in terms of what Tehran might do in a region already beset by political risks.”
Adding to market volatility in Europe is the dwindling possibility of an interest rate hike in the UK this week.
According to financial services company Hargreaves Lansdown, markets have dropped their prediction of an interest rate rise from the Bank of England, pricing in an eight per cent chance of a rise during the meeting of the Monetary Policy Committee on Thursday.
Sarah Coles, personal finance analyst, Hargreaves Lansdown said:
“Back in early April, a rate rise at the May meeting was so widely predicted that it seemed nailed on. However, over the past few weeks, the picture has changed dramatically. A slew of disappointing data, and efforts by Mark Carney to talk down the chances of a rate rise, mean the markets are now pricing in the chance of a rise at just eight per cent.”