London open: Stocks rally amid US debt ceiling hopes

London stocks rose in early trade on Thursday as worries about gas prices eased and amid hopes for a deal on the US debt ceiling.

At 0840 BST, the FTSE 100 was up 1% at 7,064.05.

Richard Hunter, head of markets at Interactive Investor, said: "Risk appetite has briefly returned for investors, although sentiment remains delicately poised.

"Progress on debt ceiling talks in the US seems to suggest a temporary deal to avoid default, which gave markets a shot in the arm as the trading session progressed. At the same time, indications that Russia may be stepping up gas supplies also steadied energy prices, which have been the main culprit for the volatility which is currently being experienced.

"UK markets have also regained some ground, although as yet unable to recover the losses of the last few trading sessions.

"The spike in natural gas prices is seen as having a more profound impact in European economies and any resultant restriction on growth would negatively impact the largely cyclical constituents to be found within the premier index. At the same time, the perceived slowing of momentum in the UK economic recovery, particularly given the removal of various government support schemes, has had a notably damaging effect on the more domestically focused FTSE 250."

Investors were also mulling the latest survey from Halifax, which showed that house prices rose in September at the fastest monthly pace since February 2007 amid a "race for space", as the stamp duty holiday drew to a close.

House prices increased 1.7% on the month to a record £267,587, following a 0.8% jump in August. On the year, prices were up 7.4% in September following a 7.2% increase in August.

Halifax managing director Russell Galley, said: "While the end of the stamp duty holiday in England - and a desire amongst homebuyers to close deals at speed - may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired. This shows that multiple factors have played a significant role in house price developments during the pandemic.

"The ‘race-for-space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact. Looking at price changes over the past year, prices for flats are up just 6.1%, compared to 8.9% for semi-detached properties and 8.8% for detached. This translates into cash increases for detached properties of nearly £41,000 compared to just £6,640 for flats."

In equity markets, mining stocks rallied, with Antofagasta and Anglo American both sharply higher.

Royal Dutch Shell was a touch firmer despite saying it expects third-quarter cash flow to be "significantly" impacted by surging gas and electricity prices. The company said it would take a $400m hit to earnings from Hurricane Ida which hit the Gulf of Mexico in August.

Paper and packaging group Mondi was also in the black after it reported a jump in third-quarter earnings as it benefitted from higher prices and strong demand.

Fund management services provider JTC rallied after it raised £78.9m in a placing to help fund the acquisition of US-based SALI for up to $236m.

On the downside, homeware retailer Dunelm was knocked lower by an initiation at ‘sell’ by Investec.

Kingfisher, Taylor Wimpey, DS Smith, Morgan Sindall, Synthomer and Vistry were all weaker as they traded without entitlement to the dividend.

Market Movers

FTSE 100 (UKX) 7,064.05 0.97%
FTSE 250 (MCX) 22,534.18 0.66%
techMARK (TASX) 4,540.42 0.76%

FTSE 100 - Risers

Antofagasta (ANTO) 1,334.00p 4.06%
Melrose Industries (MRO) 165.00p 2.23%
Experian (EXPN) 3,112.00p 2.13%
Anglo American (AAL) 2,579.00p 2.10%
Smiths Group (SMIN) 1,458.50p 2.06%
Informa (INF) 573.80p 2.06%
InterContinental Hotels Group (IHG) 4,891.00p 2.04%
Tesco (TSCO) 273.45p 2.01%
Sage Group (SGE) 716.00p 1.85%
Polymetal International (POLY) 1,279.50p 1.79%

FTSE 100 - Fallers

Kingfisher (KGF) 318.00p -1.43%
Taylor Wimpey (TW.) 146.00p -1.35%
Smith (DS) (SMDS) 387.30p -0.79%
NATWEST GROUP PLC ORD 100P (NWG) 227.70p -0.18%
Morrison (Wm) Supermarkets (MRW) 285.30p -0.04%
Lloyds Banking Group (LLOY) 46.04p -0.02%
Meggitt (MGGT) 740.80p 0.08%
Hargreaves Lansdown (HL.) 1,416.50p 0.11%
3i Group (III) 1,248.50p 0.12%
Avast (AVST) 564.00p 0.18%

FTSE 250 - Risers

Centamin (DI) (CEY) 96.64p 3.27%
Edinburgh Worldwide Inv Trust (EWI) 296.50p 2.95%
BlackRock World Mining Trust (BRWM) 526.00p 2.73%
Templeton Emerging Markets Inv Trust (TEM) 177.60p 2.54%
Centrica (CNA) 59.02p 2.50%
Allianz Technology Trust (ATT) 299.00p 2.40%
IWG (IWG) 288.00p 2.16%
Britvic (BVIC) 904.00p 2.09%
Pagegroup (PAGE) 674.00p 2.04%
Hipgnosis Songs Fund Limited NPV (SONG) 121.80p 2.01%

FTSE 250 - Fallers

Dunelm Group (DNLM) 1,280.00p -2.74%
Harbour Energy (HBR) 353.80p -2.43%
IP Group (IPO) 126.60p -1.86%
Rathbone Brothers (RAT) 1,902.00p -1.76%
AO World (AO.) 157.90p -1.56%
Morgan Sindall Group (MGNS) 2,265.00p -1.31%
Bridgepoint Group (Reg S) (BPT) 499.00p -1.19%
Synthomer (SYNT) 460.40p -1.12%
Vistry Group (VTY) 1,117.00p -1.11%
888 Holdings (888) 405.20p -0.73%