FTSE 100 follows Asian markets with sharp jump

The FTSE 100 is forecast to step up sharply this morning as improving investor sentiment in Asia leaks across into European trading.

The blue chip index is expected to record a respectable 66 point increase to 5908 as its pushes back towards the key 6000 mark. Indices in France and Germany are also expected to see gains.

Stocks across Asia improved this morning after weekend reports that Chinese industrial profits rose by 19.1% in August. This is a slight fall back from the 19.6% growth seen in July but the performance of the Asian nation’s economy is seen as something of a barometer for how countries may bounce back from the coronavirus crisis, as China was the origin of the outbreak.

Oanda analyst Jeffrey Halley said: “Asian stocks should consolidate their gains today, although a heavy data week, upcoming holidays, and political event risk, notably in the US, is tempering exuberance.

“We can expect a volatile week for much the same reasons across global equity markets in general. At this stage, it is too soon to say that the equity correction lower has run its course given the number of variables the week ahead holds.”

A string of public holidays across China, Hong Kong, Taiwan and South Korea later in the week is also likely to dampen trading.

In the UK, the focus this week will be on crunch post-Brexit trade deal negotiations. The latest round of talks kick off tomorrow, after months of talks with no obvious progress.

CMC Markets analyst David Madden said: “The latest discussions have been relatively positive according to David Frost, the UK’s chief negotiator. It is understood that Prime Minister Johnson wants to strike a deal, but not at any cost, so the discussions are likely to go down to the wire.”

Traders will also have an eye on a speech by ECB president Christine Lagarde this afternoon, as they weigh up the strength of support for struggling European economies.