London close: Stocks rise on US jobless claims, ECB rate cut

London’s stock markets closed with gains on Thursday, as investors digested an increase in US jobless claims and an interest rate cut from the European Central Bank.

The FTSE 100 index rose 0.57%, ending the day at 8,240.97 points, while the FTSE 250 saw a larger uptick of 0.77%, closing at 20,695.77 points.

In currency markets, sterling was last up 0.34% on the dollar to trade at $1.3087, as it strengthened 0.06% against the euro, changing hands at €1.1851.

“The FTSE 100 reached its highest level in over a week as a result of broader gains and the US Federal Reserve's anticipated interest rate reduction, which improved risk appetite,” said Patrick Munnelly at TickMill.

“The largest gainers were automobiles and parts, which experienced a 2.4% increase.

“As copper prices reached a one-week high, industrial metal miners experienced a 2% increase.

“In response to hurricane concerns, energy shares experienced a 1.4% increase, as they followed the upward trajectory of crude prices.”

Jobless claims rise in the US, ECB trims interest rates

In economic news, jobless claims in the US rose in the week ended 7 September, signalling a continued softening in the labour market.

According to the Department of Labor, initial jobless claims increased by 2,000 to 230,000, aligning with market expectations.

The four-week moving average, which smooths out volatility, also edged higher to 230,750.

Outstanding claims climbed by 5,000 to 1.85 million, reflecting a gradual increase in job losses compared to earlier in the year.

On the continent, the European Central Bank (ECB) lowered interest rates by 25 basis points to 3.5%, aiming to curb inflation.

It was the second rate cut in 2023, following a reduction in June.

The ECB’s statement emphasised that inflation data remains in line with expectations, and the bank's latest projections still foresaw inflation at 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026.

“Looking ahead, we expect the ECB to eventually step up the pace of further rate cuts,” noted analysts at ING.

“Not this year, but next year.

“Currently, German wage negotiations and increasing selling price expectations still point to some stickiness of inflation.”

On home shores, UK house prices experienced their first rise in nearly two years, fuelled by falling mortgage rates and improved market sentiment.

The Royal Institution of Chartered Surveyors (RICS) reported that the house price net balance reached 1 in August, a sharp recovery from July’s -18.

Additionally, more respondents predicted continued price growth over the next three months, indicating a strengthening housing market.

“The latest survey captures an improvement in sentiment over the past month in the wake of the modest decline in mortgage rates,” said Simon Rubinsohn, RICS chief economist.

“Anecdotal remarks from respondents still demonstrate the need for realistic pricing to get deals done, with uncertainty both around the scope for further interest rate cuts and the likely contents of the forthcoming Budget keeping the mood in check.

“Affordability remains an issue in the sales market, even with somewhat cheaper finance now available.”

Finally, the Office for Budget Responsibility (OBR) issued a stark warning about the UK’s national debt.

In its latest fiscal report, the OBR said the country’s debt was on an “unsustainable path” due to the pressures of climate change and an ageing population, exacerbated by recent global crises including the pandemic and energy price surges.

The watchdog called for urgent action to address long-term risks to public finances.

Mining stocks in the green, Kier Group slumps

On London’s equity markets, mining stocks were among the risers as copper prices surged.

Anglo American gained 1.87%, Glencore rose 2.43%, and Antofagasta climbed 2.34%, reflecting a strong rally in the sector.

Scottish Mortgage Investment Trust, heavily exposed to US tech, was also up 1.99%, benefiting from positive sentiment toward the tech industry.

Drinks giant Diageo advanced 2.96% after an upgrade to ‘buy’ from Bank of America Merrill Lynch, while Renishaw gained 3.94% following its full-year results.

Cybersecurity firm NCC Group jumped 10.55%, as better-than-expected fourth-quarter trading lifted its outlook.

Trainline surged 9.21%, raising its full-year profit outlook after a strong first half.

Oil majors Shell and BP saw modest gains, up 0.14% and 0.25% respectively, as crude prices began to recover.

On the downside, M&G and Intertek fell, with M&G down 2.83%, as they traded ex-dividend.

Kier Group reversed earlier gains to fall 6.92%, despite reporting a rise in full-year profit and revenue.

Rentokil Initial continued its decline, dropping 2.13%, extending losses after a 20% fall on Wednesday following a profit warning.

Analysts at several major banks cut target prices for the pest control firm.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,240.97 0.57%
FTSE 250 (MCX) 20,695.77 0.77%
techMARK (TASX) 4,878.18 0.70%

FTSE 100 - Risers

Intermediate Capital Group (ICG) 2,248.00p 4.46%
Sage Group (SGE) 1,038.00p 4.07%
Fresnillo (FRES) 537.50p 3.66%
JD Sports Fashion (JD.) 144.90p 3.65%
Smurfit Westrock (DI) (SWR) 3,376.00p 3.18%
Rolls-Royce Holdings (RR.) 493.80p 3.07%
3i Group (III) 3,193.00p 3.03%
Anglo American (AAL) 2,062.00p 2.97%
Diageo (DGE) 2,506.00p 2.96%
Airtel Africa (AAF) 115.70p 2.84%

FTSE 100 - Fallers

M&G (MNG) 203.90p -2.49%
Rentokil Initial (RTO) 372.00p -2.13%
AstraZeneca (AZN) 12,050.00p -2.10%
Haleon (HLN) 387.40p -1.68%
Severn Trent (SVT) 2,666.00p -1.19%
British American Tobacco (BATS) 2,950.00p -1.14%
Sainsbury (J) (SBRY) 296.40p -1.07%
GSK (GSK) 1,638.50p -0.97%
Unilever (ULVR) 4,926.00p -0.85%
SSE (SSE) 1,971.00p -0.83%

FTSE 250 - Risers

NCC Group (NCC) 167.60p 10.55%
Trainline (TRN) 327.80p 9.19%
Hochschild Mining (HOC) 175.40p 6.30%
Wood Group (John) (WG.) 124.10p 5.26%
Alpha Group International (ALPH) 2,150.00p 4.88%
Carnival (CCL) 1,166.50p 4.76%
Foresight Group Holdings Limited NPV (FSG) 532.00p 4.72%
Tritax Eurobox (GBP) (EBOX) 74.00p 4.67%
Bridgepoint Group (Reg S) (BPT) 345.60p 4.66%
Allianz Technology Trust (ATT) 345.00p 4.23%

FTSE 250 - Fallers

Kier Group (KIE) 139.40p -6.92%
International Public Partnerships Ltd. (INPP) 126.00p -3.38%
Syncona Limited NPV (SYNC) 112.40p -2.77%
Pennon Group (PNN) 601.00p -2.28%
Apax Global Alpha Limited (APAX) 142.00p -2.07%
Ocado Group (OCDO) 318.50p -1.69%
SSP Group (SSPG) 158.40p -1.43%
Direct Line Insurance Group (DLG) 176.90p -1.01%
SDCL Energy Efficiency Income Trust (SEIT) 62.20p -0.96%
Bakkavor Group (BAKK) 156.00p -0.95%