Resource stocks propel FTSE higher

In mid-morning trading the FTSE 100 is up 40 points at 6614 as natural resource stocks drive sentiment higher.

Mining stocks are in demand on the FTSE for a second day in a row as talks of a Chinese stimulus package are enticing traders to pick up mineral extractors. The Chinese economy is no longer registering double-digit growth rates and it looks like the Beijing administration is going to cushion the landing by using cash injections. Natural resource stocks have been underperforming all year with investors anticipating the Chinese slowdown, and now that there is talk of a stimulus scheme those stocks look relatively cheap.

Overall the economic data out this morning has been in line with expectations, including the UK inflation report, while Germany’s economic sentiment picked up. 

Resolution is the best performing financial stock after the insurer posted a 17% increase in six-month pre-tax profit. If the figures from recruitment firm Michael Page are anything to go on, the Bank of England will be keeping rates ultra-low for some time, after the recruiter revealed an 11% decline in half-yearly profit.

In the US, we are calling the Dow Jones to start 60 points higher at 15,479, as the Chinese stimulus hopes push up US index futures.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.