FTSE on solid ground after mining sector rally

A rallying mining sector on China news has provided the means for a FTSE rally today, getting the quarter off to a cheery start.

Miners at work
Source: Bloomberg

Good news from China is always an ideal way to shake the FTSE 100 into life, thanks to the heavy mining component in the index. The tiny rise in the manufacturing PMI was hardly a major improvement, but it has been eagerly seized upon by traders evidently desperate for a positive news story. Light volumes ahead of non-farms also played their part, but it seems like the FTSE is continuing to build a platform for further gains after its temporary dive to 6700 last week. A mining rally would be the ideal foundation, as without this sector it would be hard to see how the index can enjoy a good Q3 after a lacklustre first half.

The one-way bet on Ocado shares continued this morning after first-half figures, and finally investors can revel in actual profits. It’s been a 12 year wait – hopefully they won’t have to wait as long for the next profit.

News of a potential return of hostilities in Ukraine unsettled US markets yesterday, but indices still ended the quarter in a positive fashion. With that finishing line out of the way the focus shifts to Thursday and the non-farms/European Central Bank bonanza that will greet markets. Jobs numbers need to be reassuring in order to convince investors that the second quarter for the US economy was not a write-off in the manner of Q1.

Ahead of the open, we expect the Dow Jones to start 25 points up at 16,851. 

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