FTSE 100 tops 7000 in optimistic start to the week

The FTSE 100 has reclaimed 7000 thanks to miners and oil stocks, while US futures point to some weakness following a good start to the week on Wall Street.

• Gold’s bounce bolsters mining stocks.

• Aramco news lifts FTSE oil names.

• US jobs report puts Fed policy under the spotlight again.

UK traders have returned from the bank holiday in optimistic mood, pushing the FTSE 100 back above 7000. A rally in precious metals has put the gold/silver mining contingent at the top of the leaderboard, taking heart from gold’s strong performance of late against a more convivial backdrop for the safe haven due to the slowing of the rise in Treasury yields. Aramco’s strong numbers have also put the fight back into oil stocks, lifting BP and Shell by an appreciable amount in early trading. Positive news on travel plans for the UK have also provided the spark for gains in travel stocks such as IAG and TUI, building on hopes that the summer will see a decent return to holidaying; the likes of IAG have struggled to build on the good start to the year holding below recent highs, but if today’s news can be followed by more loosening of travel restrictions the sector might have found the catalyst for more gains.

It is a crucial week for US assets, although it doesn’t feel like it so far thanks to an absence of big news items on the economic calendar today. Instead the focus will be on the monthly payroll reports, which are expected to keep up the good news story on US employment, reigniting with tedious inevitability the markets’ obsession with when and how the Fed will tighten policy. Despite the clamour to do something, or at least talk about doing something, Powell and co have stuck to their guns by and large, providing commendable visibility for ordinary US citizens but a frustrating lack of excitement for the short attention spans of financial markets.

Ahead of the open, we expect the Dow to start at 34,090, down 23 points from Monday’s strong close.