By Callum Keown
The U.K.’s FTSE 100 surged on Wednesday, continuing its strong start to 2021, driven by the index’s oil giants and banks.
The benchmark index /zigman2/quotes/210598409/delayed UK:UKX -0.42% closed 3.5% higher, reaching 10-month highs, as investors seemingly shrugged off the impact of a third national lockdown in England. The index is already 5.9% up so far this year. The more domestically-focused FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX -0.07% index rose 1.2% .
While mining stocks helped the FTSE 100 to start the year with impressive gains on Monday and energy stocks led the way on Tuesday, both sectors combined on Wednesday.
BP stock /zigman2/quotes/202286639/delayed UK:BP -0.59% climbed more than 6% and shares in Royal Dutch Shell /zigman2/quotes/204253697/delayed UK:RDSB -0.28% /zigman2/quotes/206428183/delayed UK:RDSA -0.21% rose close to 6%, as oil prices rallied after the Organization of the Petroleum Exporting Countries reached an agreement on Tuesday on production curbs in February and March. Saudi Arabia will also voluntarily take an additional production cut of 1 million barrels a day. Oil prices rallied by nearly 5% following the deal, hitting 11-month highs.
West Texas Intermediate crude futures /zigman2/quotes/209723049/delayed CL00 -0.12% broke above $50 per barrel for the first time since February 2020, while March Brent crude climbed to $53.61. BP stock is 13.7% up year-to-date, while rival Shell is 13.6% up. The index’s miners had another good day, led by Glencore /zigman2/quotes/201400686/delayed UK:GLEN +0.49% , Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -0.71% and Anglo American /zigman2/quotes/201381512/delayed UK:AAL -2.95% .
The more domestically-focused FTSE 250 index rose 1.2%
London-listed banks also enjoyed gains as bond yields rose amid the closely-contested Georgia runoff elections in the U.S., in which the Democrats moved closer to a Senate majority.
The Associated Press called one of the two seats for Democrat Raphael Warnock early on Wednesday morning. AP also projected a slim lead for Democratic challenger Jon Ossoff over Republican Sen. David Perdue — a lead of 0.22 percentage points with 97% of the expected vote counted. The Democrats need to win both contests to take control of the Senate, as Vice President-elect Kamala Harris would cast tiebreaking votes.
With a potential Democrat majority raising the prospect of further stimulus, the U.S. 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.56% climbed above 1% for the first time since March, while bond yields across Europe /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y +3.00% /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y +11.60% also rose.
Shares in Standard Chartered /zigman2/quotes/200125072/delayed UK:STAN +0.14% surged 9.4%, while HSBC /zigman2/quotes/203901799/delayed UK:HSBA -0.32% rose 9.9%, and Barclays /zigman2/quotes/208409333/delayed UK:BARC +0.83% gained 8.3% as a result.