FTSE 100 jumps as banks and travel & leisure shares rally, GBP mixed, gilts steady By Investing.com

Key points

• FTSE 100 rallies amid jump in banks and travel & leisure stocks
• Pearson PLC (LON:PSON) rallies following earnings
• USD stronger as DXY hits 4 month highs
• Oil lower despite attacks on Saudi infrastructure
• Bitcoin flat but holding firm above $51k

By Samuel Indyk

Investing.com – The FTSE 100 jumped on Monday as reopening stocks continued their recent rally amid declining Covid case numbers and banks rallied amid the prospect of higher yields.

The FTSE 350 Banks index was the best performing sector in the UK with all the components finishing in the green as the squeeze on margins from low yields subsides and profitability should improve going forward. Lloyds Banking Group (LON:LLOY), HSBC Holdings PLC (LON:HSBA) and Barclays (LON:BARC) all jumped by over 3.5%.

FTSE 350 Travel & Leisure stocks were also strong as the reopening names continue their recent rally. Airlines, hotels, and holiday operators were the best performers amid optimism over the reopening of the economy in time for the summer travel season. Policymakers have previously spoken of pent-up demand with the Bank of England’s Chief Economist Andy Haldane recently saying the economy is “poised like a coiled spring”.

Pearson, the UK-listed education and publishing company, rose to the top of the blue-chip index after announcing results pre-market. The company, which had been dragged into the GameStop (NYSE:GME) sage amid a high level of short interest, saw a decline in profit and revenue in 2020 but maintained their dividend and provided an update on the strategic overhaul, focusing on online and life-long learning.  

Oil

WTI and Brent crude prices slipped from their highs hit during the Asia-Pacific trading session after news of a drone-and-missile attack on Saudi Aramco (SE:2222) facilities at the Ras Tenura terminal. However, the operator said there was no substantial damage and no loss of life from the attack.

Currencies

The dollar index hit its highest level in four months amid rising US bond yields. The US stimulus bill passing through the Senate over the weekend was also supportive, with the House passage expected on Tuesday. Separately, a faster reopening in the US will also be supportive. The CDC on Monday loosened rules regarding social distancing for vaccinated people, saying they can now visit people indoors without masks, the next step to getting back to normal.

GBP was mixed, weaker against the USD but stronger against the EUR amid comments from Bank of England Governor Bailey.

“If I had to summarise the diagnosis, it’s positive but with large doses of cautionary realism,” Bailey said in a speech to the Resolution Foundation.

Cryptocurrencies

Bitcoin was marginally higher and holding above $50,000. Over the weekend, Chinese app Meitu Inc (HK:1357) announced they had bough $40mln worth of bitcoin and ether to provide a “diversification to holding cash”. The news follows the likes of Tesla in adding cryptocurrencies to the balance sheet as a means of diversifying reserves.