UK stocks rallied strongly on Wednesday as investors cheered a looming reopening boom.
The FTSE 100 (^FTSE) outperformed continental rivals and the more domestically-focused FTSE 250 (^FTMC) climbed to an all-time high on hopes that reopening vast swathes of the economy next week will unlock a growth boom.
The FTSE 100 closed up 0.9% at 6,885.32 — its highest finish since February 2020. The bluechip index had extended strong gains seen in the prior session. The FTSE 250 closed up 0.7% to end the day above 22,000 for the first time ever.
The rally comes ahead of the next stage of reopening in the UK on 12 April. Non-essential shops will be allowed to reopen and outdoor dining and drinking will be permitted.
Companies set to benefit were on the up. Shopping centre operator Hammerson (HMSO.L) gained 6.7%, Wagamana-owner The Restaurant Group (RTN.L) rose 2.3%, and pub group Marstons (MARS.L) rallied 1.9% as it confirmed plans to reopen hundreds of its pub gardens next week.
Sentiment was helped by private sector data published on Wednesday morning that showed the UK's dominant service sector returned to growth in March. The sector rebounded from a four-month decline as businesses prepared to reopen. On Tuesday, the IMF had upgraded its growth forecasts for the UK economy.
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"The impressive 0.8% upward revision for 2021 growth highlights how the vaccination efforts led by the UK government should have a tangible effect on economic performance," said Joshua Mahony, a senior market analyst at IG. "Meanwhile, the IMF provided a minimal 0.2% upward revision for the euro area, highlighting the detrimental impact of their stuttering vaccination programme."
"In stark contrast to the problems in Europe, the UK appears to be in a much better position, as the UK economy heads towards a further unlocking next week," said Michael Hewson, chief market analyst at CMC Markets. "We’ve already seen evidence that businesses are gearing up for this economic reopening."
Minutes from the latest Fed policy meeting will be published this evening, a closely watched event for investors and traders.
Stocks were mixed in Asia and the Pacific overnight. Japan's Nikkei (^N225) rose 0.1%, the Hong Kong Hang Seng (^HSI) sank 0.8%, the Shanghai Composite (000001.SS) declined 0.15%, and South Korea's KOSPI (^KS11) rallied 0.3%. In Australia, the ASX 200 (^AXJO) gained 0.6%.