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Wall Street gathers momentum as FTSE 100 closes higher

FTSE  Traders work on the floor of the New York Stock Exchange during opening bell in New York City on January 18, 2023. - Wall Street stocks climbed early on January 18, 2023, on easing worries about further Federal Reserve moves to aggressively counter inflation following the latest US economic data. (Photo by ANGELA WEISS / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
FTSE higher as Wall Street starts brisk week with modest gains. Photo: Angela Weiss/AFP

The FTSE 100 and European stocks finished higher on Monday, despite recession fears on both sides of the Atlantic.

The FTSE 100 (^FTSE) rose 0.24% to close at 7,789, while the CAC 40 (^FCHI) in Paris jumped 0.62% to 7,039 points. In Germany, the DAX (^GDAXI) climbed 0.49% at 15,033.

Across the pond, stocks were higher despite fears of a potential slowdown in rate hikes from the Federal Reserve and braced for a busy week of earnings.

The Dow Jones (^DJI) rose 1.06% to 33,728 points. The S&P 500 (^GSPC) gained 1.38% to 4,027 points and the tech-heavy NASDAQ (^IXIC) advanced 1.97% to 11,359.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The FTSE 100 has opened marginally higher, as quiet optimism continues to swirl.”

Read more: UK recession could be twice as bad as previously expected

She also highlighted “investor confidence has jumped 12% according to the Hargreaves Lansdown survey which tracks sentiment every month.”

Ocado (OCDO.L) led this session's gains, up 3.93%, followed by Persimmon (PSN.L), up 2.04%, and Primark owner Associated British Foods (ABF.L). Miner Antofagasta (ANTO.L), up 1.71%, and JD Sports (JD.L), up 1.66% complete the top five risers.

Sterling (GBPUSD=X) also hit a seven-month high against US dollar, with the pound climbing 0.16% to around $1.2413 before retreating.

AJ Bell investment director Russ Mould said: “The big economic announcements come on Thursday and Friday as the US releases GDP figures for the fourth quarter and core inflation numbers from the world’s largest economy are also released.

“These will offer insight into two key and related factors which are grabbing the market’s attention right now. First, will the US avoid a deep recession and second, will inflation ease sufficiently to allow the Federal Reserve to ease up on interest rates before it has inflicted too much pain on businesses and consumers?

“Tomorrow the focus will be on PMI data from the US, Europe and the UK. Always a useful leading indicator given how on top of the economic backdrop the purchasing managers surveyed must be to get their decisions right.

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“Transport and infrastructure names were, appropriately enough, helping to get the UK market moving at the start of the week. Balfour Beatty (BBY.L) continues to impress under market Mr Fix-it Leo Quinn as it snared a £1.2bn contract to deliver a package of works linked to the proposed Lower Thames Crossing while National Express secured new rail franchises in Germany.”

The EY Item Club warned the UK recession will be deeper than it thought three months ago.

The consultancy sees a 0.7% contraction for this year, compared with 0.3% predicted in October. This will be followed by growth of 1.9% in 2024, down from the 2.4% improvement previously expected.

Meanwhile, Brent crude (BZ=F) bounced back and was trading at around $88 per barrel, amid optimism around China's demand outlook.

In Asia, Tokyo’s Nikkei 225 (^N225) closed higher, climbing 1.33% to 26,906 points, while the Hang Seng (^HSI) in Hong Kong gained 1.82% to 22,044. The Shanghai Composite (000001.SS) also edged higher, rising 0.76% to 3,264 points.

Watch: Fed will raise rates again, 'markets will like it': Teddy Weisberg