London close: FTSE back above 7,000 as energy prices ease
London stocks climbed back above the 7,000 mark by the close on Thursday, as a temporary deal on the US debt ceiling was reached, while worries about energy prices eased.
The FTSE 100 ended the session up 1.17% at 7,078.04, and the FTSE 250 was 0.77% firmer at 22,559.22.
Sterling was also stronger, last trading 0.39% stronger on the dollar at $1.3635, and gaining 0.22% against the euro to €1.1779.
“It’s telling that whilst London’s blue-chip index has enjoyed a decent rally today, its bedfellow - the more domestic-focussed FTSE 250 - hasn’t quite kept pace,” said AJ Bell financial analyst Danni Hewson.
“The former has been boosted by improved sentiment in Asia advancing miners with Anglo American, Antofagasta and Rio Tinto making decent gains, but for many investors they’ve just not been able to shake the chill grip of the inflation spectre.
“Anyone in charge of a household budget was hoping the transitory argument held water, but its now looking more than a little leaky and even the Bank of England’s new chief economist has confirmed that though he still sees inflation as a spike, the spike is longer and larger than had been expected.”
Hewson noted that global economies were still hungry for a safety net, with the US stitching a hole in a big one late in the afternoon.
“Wall Street has seen all indices push higher after a temporary agreement was struck to raise the debt ceiling.
“The news followed another boost to shares from decent jobs figures which suggest the labour market is getting back on track after putting the disruption from Hurricane Ida and a summer spike in Covid-19 cases behind it.
“Stocks that have suffered falls in recent days are enjoying a resurgence of attention, with some investors undoubtedly bagging a bargain.”
Across the pond, weekly jobless claims in the United States surprised to the downside in last week’s figures, with some economists expecting them to continue doing so.
According to the Department of Labor, initial unemployment claims for the week ending on 2 October decreased by 38,000 to reach 326,000.
Economists at Barclays had been expecting a rise to 370,000.
The four-week moving average, which aims to smooth out the fluctuations in the data from one week to another, increased by 3,500 to 344,000.
“The report strongly supports our contention that claims have been lifted in recent weeks by the impact of Hurricane Ida, which is now fading rapidly from the numbers,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“The seasonals remain quite tough, so this drop in claims is due to an outsized decline in unadjusted claims for the time of year, after a couple weeks of bigger-than-usual increases.
“Claims likely will nudge up a bit next week, but a combination of more favorable seasonals and the continued underlying downward trend points to a good chance of claims dipping below 300,000 later this month, for the first time since mid-March 2020.”
On home shores, 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, according to a survey from Halifax.
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.
The worst-performing regions in terms of annual house price inflation were all in the South and East of England, although Halifax did note that these are also the areas with the highest average house prices.
“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,” said Halifax managing director Russell Galley.
“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.”
In equity markets, mining stocks rallied, with Antofagasta up 5.3%, Anglo American ahead 5.17%, Rio Tinto rising 3.47%, and BHP 3.56% higher.
Royal Dutch Shell was 1% firmer, despite saying it expected third-quarter cash flow to be "significantly" impacted by surging gas and electricity prices.
The oil major said it would take a $400m hit to earnings from Hurricane Ida which hit the Gulf of Mexico in August.
Fund management services provider JTC rocketed 10.03% after it raised £78.9m in a placing to help fund the acquisition of US-based SALI for up to $236m.
Scottish Mortgage Investment Trust was also in the black by 3.19%, with IG market analyst Chris Beauchamp describing it as a fund with a heavy focus on tech, which had risen "as the Nasdaq 100 and its heavyweight names stage a recovery".
Tour operator TUI jumped 6.12% after it announced plans to raise €1.1bn (£940m) through a fully-underwritten capital increase on Wednesday, to help pay down massive debts incurred during the Covid-19 pandemic.
Online greeting card retailer Moonpig added 7.47%, having fallen sharply a day earlier on the back of a broker note.
Workspace rallied 4.89% after the flexible office space provider said customer demand had improved in the second quarter of its trading year, with a strong pick-up in activity during September.
On the downside, homeware retailer Dunelm was knocked 0.46% lower by an initiation at ‘sell’ by Investec.
NatWest was on the back foot by 1.36% after the bank pleaded guilty to breaches of money-laundering regulations and warned it will book a provision in its third-quarter results related to a potential fine.
Online trading platform CMC Markets fell 2.53% after it reiterated its full-year guidance for net operating income.
DS Smith was 0.74% weaker and Next was off 0.39% as its shares traded without entitlement to dividends.
Market Movers
FTSE 100 (UKX) 7,078.04 1.17%
FTSE 250 (MCX) 22,559.22 0.77%
techMARK (TASX) 4,550.46 0.98%
FTSE 100 - Risers
Antofagasta (ANTO) 1,350.00p 5.30%
Anglo American (AAL) 2,656.50p 5.17%
Standard Chartered (STAN) 472.00p 4.77%
Johnson Matthey (JMAT) 2,615.00p 3.81%
BHP Group (BHP) 1,900.60p 3.56%
Rio Tinto (RIO) 4,950.50p 3.47%
Scottish Mortgage Inv Trust (SMT) 1,390.00p 3.19%
Evraz (EVR) 579.40p 3.17%
Aveva Group (AVV) 3,585.00p 3.16%
Pershing Square Holdings Ltd NPV (PSH) 2,765.00p 2.98%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 176.86p -1.88%
NATWEST GROUP PLC ORD 100P (NWG) 225.00p -1.36%
Admiral Group (ADM) 3,071.00p -1.29%
Ocado Group (OCDO) 1,637.00p -1.27%
Hargreaves Lansdown (HL.) 1,399.00p -1.13%
National Grid (NG.) 896.40p -0.80%
Smith (DS) (SMDS) 387.50p -0.74%
Pearson (PSON) 737.00p -0.73%
Croda International (CRDA) 8,342.00p -0.71%
Kingfisher (KGF) 320.30p -0.71%
FTSE 250 - Risers
JTC (JTC) 787.00p 10.03%
Moonpig Group (MOON) 307.00p 7.57%
Baltic Classifieds Group (BCG) 201.00p 6.63%
TUI AG Reg Shs (DI) (TUI) 347.00p 6.12%
Workspace Group (WKP) 837.00p 4.89%
Ferrexpo (FXPO) 310.40p 4.65%
Reach (RCH) 353.50p 4.12%
Auction Technology Group (ATG) 1,366.00p 3.97%
Baillie Gifford US Growth Trust (USA) 318.50p 3.92%
TP Icap Group (TCAP) 154.90p 3.83%
FTSE 250 - Fallers
IP Group (IPO) 123.00p -4.65%
Marks & Spencer Group (MKS) 171.80p -4.29%
Restaurant Group (RTN) 97.60p -3.50%
easyJet (EZJ) 639.20p -3.36%
Chrysalis Investments Limited NPV (CHRY) 238.00p -3.25%
Rathbone Brothers (RAT) 1,874.00p -3.20%
Capita (CPI) 47.29p -2.62%
Harbour Energy (HBR) 353.20p -2.59%
CMC Markets (CMCX) 269.50p -2.53%
Greggs (GRG) 2,932.00p -2.23%