UK stocks climb on optimism over US Fed rates

The FTSE 100 index advanced 0.57% to 6,788, while the FTSE 250 index was trading 0.81% higher to 21,696

UK stocks climbed in early morning trading, reflecting gains seen elsewhere on optimism that the US Federal Reserve would maintain a dovish stance on interest rates at a key meeting this week.

The UK’s benchmark FTSE 100 index advanced 0.57% to 6,788, while the FTSE 250 index was trading 0.81% higher to 21,696.

It comes after a solid day for Asian stocks, with Japan’s Nikkei 225 advancing 0.52%, China’s Shanghai Composite gaining 0.78% and the Hang Seng in Hong Kong rising 0.67%.

Meanwhile in commodities, gold remained virtually flat at $1,731.87 per ounce, while Brent crude oil futures were down 0.63% to $68.31 a barrel.

In company news, Chilean copper miner Antofagasta dropped 0.6% to £17.25 despite spiking its dividend and reporting a big rise in 2020 earnings on the back of higher copper prices.

After experiencing a big drop to nearly $2.20 per pound as the pandemic hit, copper swiftly rebounded to trade at more than $3.50 – well above 2019 levels – by the end of the year on optimism over a global economic recovery, and this was mirrored in the miner’s full year results. Copper has since gone on to trade at more than $4 per pound.

For the year ended 31 December 2020, Antofagasta’s earnings before interest, tax, depreciation, and amortization (EBTIDA) increased 12.3% to $2.7 billion year-on-year (YOY), with net cash costs standing at $1.14 per pound.

A final dividend of 48.5 cents per share was declared, bringing the total dividend for the year to 54.7 cents per share, significantly higher than the 17.8 cents declared last year.

Bakery chain Greggs climbed 6.2% to £23.48 despite swinging to its first annual loss as a public company after lockdowns weighed on sales, as it touted optimism ahead and said it has made a better than expected start to 2021.

In the first ten weeks of 2021, company-managed shop like-for-like sales were down 28.8% year-on-year (YOY) and delivery sales were 9.6% of total company-managed shop sales. The better-than-expected start comes as the hit to sales in 2020 from lockdowns was captured in the company’s annual results.

For the year ended 31 December, the pre-tax loss was £13.7 million compared with a profit of £108.3 million last year, as sales dropped to £811.3 million from £1.16 billion.

The company continued to keep the dividend suspended and said it would need to return to a level of profitability and cash generation sufficient to resume payouts.