FTSE 100 breaks higher despite huge Q2 contraction

A circa 20% decline in Q2 has done little to dent confidence in UK stocks, with the FTSE 100 reaching a three-week high. Meanwhile, precious metals are turning higher once more after a historic decline yesterday. UK housebuilders are enjoying a positive day, with a sharp surge in construction activity helping improve sentiment

• FTSE 100 gains over 2%, with huge decline in UK GDP being overlooked in favour of more optimistic forecasts
• Precious metals head higher once more
• Housebuilders on the rise after boom in construction activity

US stocks joined their European counterparts in the green today, with the S&P 500 moving within touching distance of all-time highs. After months of indecision, we are finally seeing much more conviction from the FTSE 100 as it hits a three-week highs in the wake of an economic rebound in June. With Q2 growth confirmed at -20.4%, traders have been happy to concentrate on the more current NIESR forecasts that shows a potential 15% rebound in Q3. While such a recovery would leave the economy 10% smaller in September than it was in February, it does at least signal to possibility to regain much of the lost ground by year-end if we do not see another wave of coronavirus-led restrictions.

Once again we are looking towards the precious metals as a source of volatility, although the apparent one-way trade came crashing down after gold saw its biggest fall in seven-years yesterday. Nevertheless, today has once again seen the bulls take charge, as we head higher to maintain the long-term uptrend for gold and silver.

Housebuilders are surging after the latest piece of positive data that highlighted a sector which is firing on all cylinders in a bid to take advantage of the recent stamp duty holiday. With construction activity hitting a record high of 23.5% in June, there is no doubt the sector is heading in the right direction despite operations grinding to a halt in H1. However, there is still a way to go, with June output still almost 25% lower than pre-crisis levels.

Reprinted from fxstreet , the copyrights all reserved by the original author.