25th June 2021

Markets ended the week in positive territory, with the FTSE100 Index gaining approximately 2.3% at the time of writing. Investors remained optimistic following the Bank of England’s decision to keep interest rates on hold at 0.1%, despite prices rising faster than it had expected and inflation likely to rise above 3% in the months ahead. It judged that the problem was transitionary, stating that the UK would “experience a temporary period of strong growth and above-target inflation, after which growth and inflation will fall back”.

Business confidence is surging to multi-year highs across Europe as companies become more upbeat about the strength of an economic rebound this summer thanks to booming global trade and an easing of coronavirus lockdowns. French business sentiment in June hit its best level in almost 14 years, while expectations in Germany rose to their highest in a decade.

There was a similar story in the US, with the Dow Jones Industrial Average rallying 2.0% and the S&P 500 gaining 1.8% to reach a new all time high. The bullish catalyst propelling the rise was the Biden administration securing an infrastructure deal worth about $1tn. The deal will focus on upgrading roads, bridges, and broadband networks over the next eight years. The announcement clears up significant uncertainty for investors, who have long waited for further clarity about the prospect of additional government spending.