This week in the markets: UK shares helped by brighter economic news

UK investors returned after their Easter break to find their home market in good cheer - with the FTSE 100 jumping above the 8,000 mark on Monday morning.

Oil and mining companies helped drive those early gains, with BP and Shell both up more than 2% in early trading on Tuesday, while Rio Tinto and Anglo American both gained more than 3%. Commodity companies have been helped by rising commodity prices. Crude oil rose 1% yesterday to above $87 a barrel while gold hit a new high of $2,265 an ounce.

Elsewhere, there were signs of life returning to the UK economy - still officially in recession, of course - with a small positive reading for the manufacturing sector in the latest monthly purchasing managers’ index (PMI) flash data.  Manufacturers returned to growth for the first time in well over a year.

There was also news on the housing market - still an important bellwether of UK growth - with mortgage approvals in February the highest since September 2022. That uptick has been helped by gradually falling mortgage rates. The average paid by new mortgage borrowers fell to 4.9% in February down from a high of 5.34% back in November.

That still means, however, that anyone rolling off fixed terms deals are likely to be in for a nasty hike in repayments - a fact reflected in a dip in house prices over March, according to Nationwide today.

Finally in the UK - a story reflective of the challenges facing Britain’s financial markets and the threat the UK faces to its status as a financial hub. Another company - Redx, a pharmaceutical firm listed on the Aim market - has become the latest to confirm it will delist in the UK. Redx complained that it was not achieving a fair valuation on the UK stock market and that it could not readily raise the money it needs to grow. It’s a blow to the status of the UK stock market and underlines why the government has seen the need to improve the corporate environment of the UK.

Markets end turbo-charged Q1

Elsewhere in the world, markets paused on Monday after rounding off a turbo-charged first quarter of 2024. The S&P 500 in the US dipped slightly but remains 10.6% up in the year so far. In Europe, the Euro Stoxx 50 is up 13% and in Japan the TOPIX is 14% higher. The FTSE 100 lags by comparison, up just 3.4%.

In the US, investors spent yesterday digesting their own PMI manufacturing data, with US companies also returning to growth last month. This better news on growth has the effect of pushing interest rate expectations higher. The US futures market was pricing in a 58% chance of a rate cut in June, down from about 64% just a week ago. Overall markets think there will be three Fed rate cuts this year.

There was also a knock-on impact in the bond market, where yields rose on the expectations of higher for longer rates.

The next relevant news will drop on Friday of this week when US jobs numbers are due. Better labour market numbers could push rate expectations out further, with a likely negative effect on financial markets.

In Europe, inflation data on Wednesday will set the agenda.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Please be aware that past performance is not a reliable guide indicator of future returns. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.