U.K. stocks ended firmly in the green Tuesday, buoyed by gains for shares in GlaxoSmithKline PLC and Ferguson PLC.
Risk appetite also was revived by a continuing ebb in global trade-war worries.
How markets are moving
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.01% rose 1.6% to close at 7,000.14, putting an end to a four-session losing streak. On Monday, the index fell 0.5%, finishing at its lowest level since December 2016. It’s down 9% this year.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.8643% changed hands at $1.4162 on Tuesday, down from $1.4230 late Monday in New York. Sterling hit an intraday low of $1.4066, the weakest level in a week.
What’s driving markets
London’s blue-chip stocks rallied alongside European stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.04% and Asian stocks /zigman2/quotes/210597971/delayed JP:NIK +0.94% /zigman2/quotes/210598030/delayed HK:HSI +0.20% , with the moves coming after Wall Street’s massive jump on Monday that left the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.34% up 669 points.
U.S. stocks logged their best one-day percentage gains on Monday on reports that U.S. and China are conducting behind-the-scenes talks to avert a global trade war. Fears about a possible trade war have hit global equity markets this month, driven by U.S. President Donald Trump’s push for tariffs on at least $50 billion of Chinese products.
The Dow on Tuesday was adding to Monday’s rally.
GlaxoSmithKline PLC /zigman2/quotes/200381158/delayed UK:GSK -0.04% gained 4.9% after the drug maker agreed to pay $13 billion to Novartis AG /zigman2/quotes/203286410/delayed CH:NOVN +2.95% for its 36.5% stake in their consumer health-care joint venture. Shares of Novartis closed up 2.1%.
Ferguson PLC /zigman2/quotes/209006722/delayed UK:FERG -0.50% jumped 6.7% as the building-materials company said it plans to pay a $1 billion special dividend, and that its revenue and profit increased in the first half of its 2018 financial year.
Mining stocks advanced, and some credit went to the easing in tensions between the U.S. and China, which is a major buyer of industrial and precious metals.
Glencore PLC /zigman2/quotes/201400686/delayed UK:GLEN -0.35% stepped up 3.2%, Anglo American PLC /zigman2/quotes/201381512/delayed UK:AAL -1.06% tacked on 1.7%, and iron-ore miner Rio Tinto PLC /zigman2/quotes/208934945/delayed UK:RIO -1.22% picked up 1.8%.
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What strategists are saying
“Investors were encouraged by comments from Chinese Premier Li Keqiang, who pledged to maintain trade negotiations and ease access to American businesses,” said Marshall Gittler, chief strategist at ALCS Global, in a note.
“China so far has unveiled tariffs on only $3 billion of U.S. goods in response to threats of tariffs on some $50 billion of Chinese goods. That muted response suggests China is trying to avoid an out-and-out trade war and leave room for negotiations. Both sides have made optimistic comments that some agreement can be reached,” he said.