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Strong earnings, dovish Fed drive FTSE 100 higher

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Strong earnings drive FTSE 100 higher; midcaps underperform
Strong earnings drive FTSE 100 higher; midcaps underperform   -   Copyright  (c) Copyright Thomson Reuters 2021. Click For Restrictions - https://agency.reuters.com/en/copyright.html
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By Devik Jain

(Reuters) -London’s FTSE 100 climbed on Thursday supported by an accommodative policy stance by the U.S. Fed, while positive earnings updates from companies including Smith+Nephew and Unilever helped the blue-chip index surge past the 7,000 mark.

The index rose 0.6% to 7,002.30, with medical products maker Smith+Nephew jumping 5.3% after it reinstated its 2021 outlook.

The FTSE 100 was further supported by Unilever, which gained 3% after it beat quarterly sales forecasts, helped by a pick up in home cooking during coronavirus lockdowns and a strong economic recovery in China.

Globally investor sentiment was lifted after the U.S. central bank said it was too early to consider rolling back emergency support for the economy and President Joe Biden proposed an $1.8 trillion stimulus package.

Investor focus will now be on the first estimate of U.S. first quarter GDP which is due at 1230 GMT.

“The Fed does not surprise, the fiscal package was well flagged, earnings tend to beat in a recovery as guidance is dampened and the bump in Q1 GDP has been slowly improving,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

“This is a steeplechase and we are just running over the latest obstacle, as a liquidity-fuelled rally continues.”

The FTSE 100 has gained about 8.5% year-to-date on optimism that speedy COVID-19 vaccinations and constant policy support from the government would drive a stronger economic recovery.

The domestically focused midcap FTSE 250 index advanced 0.2%.

Retailer WH Smith slipped 3.7% after it warned of the possible risk of breaching its covenant tests in 2022 and launched a potential 325 million-pound ($450 million) bonds offering.

Lender Standard Chartered added 3.1% after it reported upbeat first-quarter profit and said it will slash its global branch network by half, as it looks to cut long-term expenses.

(Reporting by Devik Jain in Bengaluru; Editing by Shounak Dasgupta)

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