London close: Stocks stay green as energy prices rise

London’s stock markets finished positively on Thursday, boosted by the mining sector, as investors analysed fresh UK house price data and a rate hike from the European Central Bank.

The FTSE 100 index climbed 1.95% to finish at 7,673.08, while the FTSE 250 was 1.82% higher at 18,899.70.

On the currency front, sterling was last down 0.63% on the dollar, trading at $1.2411, while it managed gains of 0.01% against the euro to change hands at €1.1642.

“Commodity prices are surging this afternoon and this has lit a fire under the FTSE 100, prompting a rally that has taken the index to its highest levels in six weeks," said IG chief market analyst Chris Beauchamp.

"Oil and natural gas prices are enjoying a solid afternoon, with the result that Shell and BP have added over 20 points to the index, with Rio Tinto and Glencore following close behind.

"Optimism around economic growth prospects for Asia has meant that Asia-focused banks HSBC and Standard Chartered have led the banking sector higher too, resulting in the best day for the FTSE 100 since mid-July."

Housing slumps while ECB hikes rates

In economic news, fresh data from the Royal Institution of Chartered Surveyors showed the UK housing market waning as house prices experienced a significant downturn last month.

The house price net balance plummeted to its most negative since February 2009, at -68, a drop from July's -55.

Furthermore, the landscape also saw reduced interest from potential buyers, with enquiries sliding to -47 from July's -45.

There was a noted decrease in newly agreed sales, marking the lowest since the pandemic's onset.

“The latest round of feedback from RICS members continues to point to a sluggish housing market with little sign of any relief in prospect,” said the institution’s chief economist, Simon Rubinsohn.

“Buyer enquiries remain under pressure against economic uncertainty and the high cost of mortgage finance.

“Meanwhile, prices are continuing to slip, albeit the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic.”

On the continent, the European Central Bank raised interest rates to a historical 4% with an increase of 25 basis points.

The change aligned with analysts' expectations and represented the 10th hike in a series which started last July.

However, the bank signalled the end of its current cycle of rate increases.

“Inflation continues to decline but is still expected to remain too high for too long," the ECB said.

“The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner.

“In order to reinforce progress towards its target, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.”

Meanwhile, updates on the ECB's forecasts showed an upward revision of eurozone inflation predictions to 5.6% for 2023 and 3.2% for 2024.

Expectations for the region's economic growth were revised to 0.7% for the current year and 1% and 1.5% for the subsequent two years.

Across the Atlantic, the US labour market persisted in its constrained state last week, with initial unemployment claims increasing by 3,000 to 220,000 - a figure lower than the 225,000 anticipated by economists.

The average over four weeks, however, declined by 5,000 to 224,500.

Secondary unemployment claims, referencing those not filed for the first time for the week ended 2 September, saw a marginal increase to 1.688 million.

Meanwhile, retail data for the US remained robust, with sales volumes rising 0.6% month-on-month to $697.56bn, surpassing the 0.2% pace economists had predicted.

However, there was a slight downward revision for the prior month's data.

Finally, the US saw a quicker-than-expected jump in wholesale prices in August, primarily driven by energy prices.

Final demand prices in seasonally-adjusted terms rose 0.7% monthly, while year-on-year saw an increase of 1.6%, a substantial leap from the 0.8% in the prior month.

Although there was a dip of 0.5% in food prices, energy prices soared by 10.5%.

Miners shine, Trainline surges and Entain faces a dip

On London’s equity markets, miners were in the spotlight after a positive assessment from JPMorgan Cazenove.

Rio Tinto saw a 4.73% jump after being upgraded by the bank from 'underweight' to 'neutral', while Anglo American leapt 7.86% after JPMorgan raised its price target.

The bank also emphasised its continued preference for Anglo American by labelling it their ‘top pick’ in the mining domain.

Flutter Entertainment added 4.31% on the back of a broker note from HSBC, which enhanced its price target for the shares, moving from 17,900p to 18,100p.

Retaining its 'buy' recommendation, HSBC voiced its belief that the current valuation did not fully capture the company's growth trajectory.

“We are reassured by the underlying growth at H1 and think that this suggests our forecasts for this year and next are well underpinned. This growth is not reflected in the valuation of the group, as we see it,” HSBC said.

Hilton Food Group rallied 6.61% after it announced its foray into the North American market, driven by a long-term supply agreement with Walmart Canada.

Online travel platform Trainline rocketed 11.16% as it initiated a £50m share buyback, coupled with a nearly 25% spike in ticket sales in the first half of its financial year.

On the downside, Ladbrokes owner Entain experienced a 1.41% drop, spurred by HSBC's decision to cut its price target for the 'buy'-rated shares from 1,830p to 1,540p.

“A fresh look at Entain’s underlying growth casts it in a less positive light than before, so we cut our target price,” HSBC said.

Outside the FTSE 350, Deliveroo climbed 6.83% on a Bloomberg report highlighting that activist investor Sachem Head Capital Management had acquired a stake in the company.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,673.08 1.95%
FTSE 250 (MCX) 18,899.70 1.82%
techMARK (TASX) 4,397.97 1.35%

FTSE 100 - Risers

Anglo American (AAL) 2,262.50p 7.74%
Airtel Africa (AAF) 126.30p 6.40%
Rio Tinto (RIO) 5,221.00p 4.73%
Glencore (GLEN) 450.75p 4.36%
Flutter Entertainment (CDI) (FLTR) 14,605.00p 4.36%
Severn Trent (SVT) 2,496.00p 4.09%
United Utilities Group (UU.) 982.40p 3.72%
CRH (CDI) (CRH) 4,426.00p 3.60%
Endeavour Mining (EDV) 1,584.00p 3.33%
Land Securities Group (LAND) 600.40p 3.23%

FTSE 100 - Fallers

Entain (ENT) 1,154.50p -0.90%
Smith & Nephew (SN.) 1,059.00p -0.84%
Next (NXT) 7,134.00p -0.61%
Convatec Group (CTEC) 224.40p -0.53%
International Consolidated Airlines Group SA (CDI) (IAG) 153.05p -0.49%
Kingfisher (KGF) 232.00p -0.43%
WPP (WPP) 767.40p -0.29%
RS Group (RS1) 748.20p -0.08%
Whitbread (WTB) 3,639.00p -0.05%
Associated British Foods (ABF) 2,085.00p 0.00%

FTSE 250 - Risers

Trainline (TRN) 276.00p 11.56%
North Atlantic Smaller Companies Inv Trust (NAS) 3,790.00p 8.60%
Hilton Food Group (HFG) 781.00p 7.58%
Pennon Group (PNN) 644.50p 7.51%
Bluefield Solar Income Fund Limited (BSIF) 122.00p 6.83%
HGCapital Trust (HGT) 416.00p 5.18%
Future (FUTR) 790.00p 5.12%
ICG Enterprise Trust (ICGT) 1,200.00p 4.90%
NextEnergy Solar Fund Limited Red (NESF) 89.10p 4.82%
Carnival (CCL) 1,128.00p 4.69%

FTSE 250 - Fallers

Hipgnosis Songs Fund Limited NPV (SONG) 87.10p -6.34%
easyJet (EZJ) 446.90p -1.59%
Bakkavor Group (BAKK) 98.60p -1.20%
International Public Partnerships Ltd. (INPP) 128.60p -1.08%
Games Workshop Group (GAW) 10,390.00p -1.05%
Marks & Spencer Group (MKS) 218.90p -1.00%
Discoverie Group (DSCV) 717.00p -0.97%
AJ Bell (AJB) 291.60p -0.75%
Aston Martin Lagonda Global Holdings (AML) 332.00p -0.66%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 460.00p -0.43%