London close: Stocks rise on buoyant global sentiment

London's financial markets rallied on Friday, buoyed by heightened confidence in the US economic outlook and encouraging UK GDP data.

The FTSE 100 ended the session up 0.8% at 7,531.53, while the FTSE 250 was ahead by 0.8% as well, closing at 18,416.76.

In currency markets, sterling advanced against both the dollar and the euro, last climbing 0.8% on the former to trade at $1.2714, while it advanced 0.32% against the common currency to change hands at €1.1644.

“At the beginning of the year even the most optimistic forecasters had not expected to see as stellar a performance as has been seen year-to-date in many of the world's largest stock indices,” said IG senior market analyst Axel Rudolph.

“In Asia and Europe several indices made new all-time record highs while in the US the Nasdaq 100 - tech mega cap heavy index - has risen by close to 40% in just six-months.

“The question is whether the second half of the year will look different as investors become increasingly complacent as shown by the ongoing ‘call’ buying frenzy, volatility dropping to pre-Covid levels and as the CNN Fear and Greed Index remains in ‘extreme greed’ territory.”

Mixed economic signals emerge from the US, UK, and China

In economic news, consumer spending in the US saw a tepid rise in June, falling short of market expectations.

Data from the Department of Commerce revealed a 0.1% month-on-month increase in personal consumption expenditures, contrary to the anticipated 0.2% rise.

In contrast, income growth exceeded projections, with a 0.4% uptick versus the forecasted 0.3% increase.

Inflation was relatively subdued, with the headline PCE price deflator growing by 0.1%, while the core level witnessed a 0.3% increase, matching the consensus.

On home shores, the Office for National Statistics (ONS) confirmed earlier estimates that the UK economy expanded by a modest 0.1% in the first quarter, registering a 0.5% contraction relative to the final quarter before the onset of the Covid-19 pandemic.

The data also indicated a decline in the savings ratio, falling to 8.7% in the quarter from 9.3% at the end of 2022, signalling a potential shift in consumer behaviour as households seemed to be depleting savings to fund expenditures.

That trend had led to the UK having the second-lowest savings ratio among G7 nations.

Interestingly, UK consumers showed an inclination to diversify their savings, with record withdrawals from traditional bank accounts and a concurrent surge in contributions to higher yield alternatives like National Savings and Investment accounts.

Meanwhile, the UK housing market demonstrated resilience in June, as house prices remained steady despite rising borrowing costs.

Data from Nationwide's house price index showed a minor monthly increase of 0.1%, offsetting May's dip by the same margin.

However, a year-on-year comparison revealed a 3.5% drop in house prices, slightly outpacing the previous month's decline of 3.4%.

On a positive note, the UK's auto industry continued its upward trend, with production surging by 26.9% in May compared to the same period in 2022, according to the Society of Motor Manufacturers and Traders.

It marked the fourth consecutive month of production growth, suggesting a robust recovery in the sector.

Finally, turning to China, the country's manufacturing sector remained subdued in June, despite a slight improvement in output levels.

The National Bureau of Statistics reported a marginal rise in the factory sector Purchasing Managers' Index from 48.8 in May to 49.0 in June.

Nevertheless, with figures remaining below the 50-point benchmark, the manufacturing sector continues to be in contraction.

Equities post notable gains; energy, auto, and mining sectors shine

On London’s equity markets, Centrica was up 3.25% after it confirmed an expansion in capacity at its Rough gas storage facility.

Situated off the coast of East Yorkshire, the facility, which was previously mothballed, can now hold 54 billion cubic feet of gas, equivalent to approximately six days of average gas usage.

The facility had been reopened in October, following Russia's invasion of Ukraine, initially with a capacity of around 30 billion cubic feet of gas.

International automotive distributor Inchcape added 2.64% after it announced a global strategic partnership with China's Great Wall Motor Company (GWM).

The collaboration aims to develop new areas of cooperation, including the distribution of GWM vehicles in markets where Inchcape is already operating, with Indonesia earmarked as the starting point.

Shares of Baltic Classifieds Group continued their upward trajectory to close 7.73% higher following better-than-expected earnings results on Thursday.

UK housebuilder Barratt Developments saw an uptick of 0.27% following its agreement to sell 604 homes to Citra Living Properties, a wholly-owned subsidiary of Lloyds Bank, for £168.4m.

Barratt announced that it would recognise revenue and profit upon the legal completion of each home under the sales agreement.

Finally, Endeavour Mining gained 1.13% after announcing the sale of its 90% interests in the Boungou and Wahgnion mines in Burkina Faso to Lilium Mining for over $300m.

The consideration involved upfront and deferred cash payments, as well as net smelter return royalties.

It also updated its 2023 production and cost guidance, indicating a reduction in production but an improvement in all-in sustaining costs.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,531.53 0.80%
FTSE 250 (MCX) 18,445.24 0.96%
techMARK (TASX) 4,464.85 0.49%

FTSE 100 - Risers

Ocado Group (OCDO) 568.00p 5.15%
Hargreaves Lansdown (HL.) 815.60p 4.08%
Entain (ENT) 1,276.00p 3.36%
Centrica (CNA) 123.95p 3.25%
IMI (IMI) 1,640.00p 2.89%
RS Group (RS1) 760.20p 2.48%
Croda International (CRDA) 5,626.00p 2.48%
DCC (CDI) (DCC) 4,412.00p 2.39%
Rentokil Initial (RTO) 613.20p 2.36%
Prudential (PRU) 1,108.50p 2.35%

FTSE 100 - Fallers

Airtel Africa (AAF) 108.20p -1.81%
United Utilities Group (UU.) 961.60p -1.50%
Severn Trent (SVT) 2,562.00p -1.20%
International Consolidated Airlines Group SA (CDI) (IAG) 161.90p -0.67%
Vodafone Group (VOD) 73.97p -0.50%
GSK (GSK) 1,388.80p -0.37%
Rio Tinto (RIO) 4,985.50p -0.25%
Anglo American (AAL) 2,233.00p -0.04%
BT Group (BT.A) 122.35p 0.04%
Scottish Mortgage Inv Trust (SMT) 666.40p 0.15%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 184.00p 7.73%
Carnival (CCL) 1,300.50p 5.90%
W.A.G Payment Solutions (WPS) 88.40p 4.25%
Dr. Martens (DOCS) 123.60p 3.60%
TI Fluid Systems (TIFS) 136.60p 3.48%
Aston Martin Lagonda Global Holdings (AML) 355.00p 3.38%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,195.00p 3.29%
Drax Group (DRX) 580.00p 3.28%
Trainline (TRN) 261.00p 3.24%
IWG (IWG) 137.30p 3.23%

FTSE 250 - Fallers

Capita (CPI) 27.44p -3.11%
Mobico Group (MCG) 97.25p -2.85%
Urban Logistics Reit (SHED) 112.00p -1.58%
Essentra (ESNT) 162.20p -1.58%
BH Macro Ltd. GBP Shares (BHMG) 367.50p -1.47%
Bakkavor Group (BAKK) 95.00p -1.45%
Chemring Group (CHG) 283.00p -1.39%
Mitchells & Butlers (MAB) 203.80p -1.36%
Great Portland Estates (GPE) 415.00p -1.28%
TUI AG Reg Shs (DI) (TUI) 557.50p -1.24%