By Barbara Kollmeyer
London stocks surged on Wednesday, outpacing European rivals as the pound fell and the food and travel industry rose on optimism over lockdowns ending.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.45% climbed 0.9%, while the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.08% backed away from a record high, dropping 0.2%. Driving U.K. gains was a 0.5% drop for the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0072% , which fell to $1.37530, a level not seen since early last week. A weak pound can help boost the FTSE, which is home to many multinational companies that derive revenue overseas.
“The new quarter has turned the tables in the currency market, as the rally in bond yields that turbocharged the dollar along with sterling last quarter seems to have run out of fuel for now, breathing some life back into the devastated euro and yen,” said Marios Hadjikyriacos, investment analyst at XM, in a note to clients.
“Treasury yields have cooled down in recent sessions, diminishing the dollar’s rate advantage,” he added. The yield on the 10-year note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.97% inched up to 1.66%, but well off a level of 1.77% seen late March. The yield on the 10-year U.K. gilt /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y +4.86% has cooled to 0.789% from 0.847% in late March and 0.877% in mid March.
Elsewhere, shares of banks and mining stocks were helping to underpin the index, with HSBC /zigman2/quotes/208272822/composite HSBC +0.20% /zigman2/quotes/203901799/delayed UK:HSBA +0.33% shares up 1% and Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -4.84% /zigman2/quotes/202627887/composite RIO -3.80% up 1.4%.
Oil companies were also in focus, with shares of Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -1.67% /zigman2/quotes/205095589/composite RDS.A -1.19% flat. The energy giant warned of a $200 million hit for first-quarter adjusted earnings from a Texas storm, but would turn a first profit for its upstream oil and gas unit since the COVID-19 pandemic.
Shares of rival BP /zigman2/quotes/202286639/delayed UK:BP -1.90% rose 2% after gains on Tuesday, as the oil group said it would hit its net debt target almost a year earlier than expected .
Also higher were shares of cruise operator Carnival /zigman2/quotes/210414141/delayed UK:CCL +0.44% , which rose 5%, alongside gains for U.S. shares of Carnival Corp. /zigman2/quotes/202325446/composite CCL -0.49% and Norwegian Cruise Line /zigman2/quotes/204183397/composite NCLH -0.39% . A spokeswoman for the Centers for Disease Control and Prevention, Jade Fulce, told Bloomberg on Tuesday that cruises could resume by midsummer on a restricted basis. Carnival Corp.’s Cruise Line on Tuesday threatened to take its ships to non-U.S. ports .
Shares of pub operator Mitchells & Butler /zigman2/quotes/209008939/delayed UK:MAB +0.26% climbed 3%.
Elsewhere, shares in Deliveroo /zigman2/quotes/225812915/delayed UK:ROO -4.05% rose almost 3% on Wednesday — the first day an estimated 70,000 individual investors were allowed to trade the Amazon /zigman2/quotes/210331248/composite AMZN +0.58% -backed company they bought during the food delivery company’s poor stock market debut last week.