London close: Stocks rise as US jobless claims reach four-month low

The FTSE 100 index gained 0.2% to close at 8,284.91 points, and the FTSE 250 rose 1.23% to 21,010.44.

In currency markets, sterling was last up 0.65% on the dollar to trade at $1.3410, while it increased 0.31% against the euro, changing hands at €1.2005.

“It has been a week that has seen huge gains for Chinese markets, while indices in Europe and the US have reacted enthusiastically, if not with quite the same big gains in prices,” said IG chief market analyst Chris Beauchamp.

“The risk of a US recession has diminished and now Chinese economic weakness is being counteracted by some impressive action on the part of authorities there.

“Stock market bears are running out of reasons to support their negative theses.”

Beauchamp noted that on a macro basis, the outlook might look solid, but cautioned that there was still “the problem of October” to navigate.

“This being an election year, investors would be wise to be at least mentally prepared for some volatility in the coming month, even if this merely tees up the post-election rally.”

Initial jobless claims fall stateside, UK consumer confidence wanes

In economic news, initial jobless claims in the US fell to 218,000 for the week ended 21 September, marking the lowest level in four months.

That was a decrease of 4,000 from the previous week, defying expectations of a rise to 225,000.

Despite the decline in new claims, continuing claims increased by 13,000 to 1.83 million, while the four-week average, which smooths out volatility, dropped to 180,878.

The US economy meanwhile grew by 3% year-on-year in the second quarter of 2024, confirming earlier estimates from the Bureau of Economic Analysis (BEA).

The report also included upward revisions for previous years, raising the average annual GDP growth rate from 2.1% to 2.3% between 2018 and 2023.

Despite maintaining the overall growth figure for the second quarter, the BEA adjusted individual components, revising up private inventory investment and federal spending, but lowering estimates for non-residential investment and exports.

Michael Pearce, deputy chief US economist at Oxford Economics, said the revised estimates showed “a more vigorous US economy”.

“The annual GDP revisions show the US economy grew even stronger than previously thought in recent years and reaffirm that recent performance has been solid as well,” he said.

“What's more, the recovery is built on strong foundations, with incomes growth revised significantly higher and productivity growth faster than previously presumed.”

On home shores, UK consumer confidence weakened in September, according to the British Retail Consortium.

Concerns over the upcoming Budget led to declines in sentiment about both personal finances and the economy.

The index measuring the personal financial situation fell to -6 from 1 in August, while economic expectations plunged to -21 from -8.

The BRC attributed the decline to uncertainty ahead of new chancellor Rachel Reeves’ first Budget announcement in October.

“Retailers could face a turbulent few months,” said Helen Dickinson, chief executive of the BRC.

“Negative publicity surrounding the state of the UK’s finances appears to have damaged confidence in the economic outlook, particularly among older generations.

“The Budget is a key opportunity to inject some confidence back into the economy, boosting spending and helping to foster much needed investment in businesses.”

Elsewhere, UK car production continued to decline in August, falling 8.4% year-on-year to 41,271 units, the lowest level in over three years.

Production of electric and hybrid vehicles saw a sharp drop of 25.9%, although the Society of Motor Manufacturers and Traders (SMMT) anticipated a rebound with new models set to launch.

Both domestic and export markets saw reductions, with production for the domestic market down nearly 20% and exports falling 5.9%.

In Germany, consumer sentiment slightly improved in October, as the GfK consumer climate index rose to -21.2 from -21.9 in September.

Despite the modest increase, confidence remained below the historical average due to continued economic concerns.

The Swiss National Bank lowered its interest rate by 25 basis points to 1.0%, the third reduction this year, aligning with expectations.

It took the policy rate to its lowest level since early 2023.

Finally on the economic front, government officials in China pledged further economic support overnight as the country faced slowing growth and deflationary pressures.

The politburo, led by President Xi Jinping, announced plans for additional government bond issuance and fiscal spending to boost investment and meet the country’s growth target of around 5%.

The move followed recent stimulus measures by the central bank aimed at stabilising the economy amid weakened consumer confidence and a struggling property market.

China-exposed stocks rally, oil majors slump

On London’s equity markets, stocks with exposure to China were among the strongest performers, with Burberry Group surging 8.71%, while Prudential rose 6.14% and Standard Chartered climbed 1.94%.

Mining stocks also posted strong gains, reflecting hopes for increased demand from China.

Anglo American advanced 6.16%, Antofagasta rose 5.78%, Glencore was up 4.87%, and Rio Tinto gained 3.62%.

Diageo saw its shares rise 4.68% after the drinks giant reaffirmed its annual guidance despite challenging global conditions.

In a statement ahead of its annual general meeting, chief executive Debra Crew noted continued consumer caution, particularly in Latin America and the Caribbean, but expressed confidence in the company's strategic outlook.

Watches of Switzerland Group experienced the biggest rise, jumping 11.13% following an upgrade to 'buy' by Deutsche Bank.

IP Group also saw a notable increase, up 4.89%, after announcing it would net £134m from the sale of its stake in fraud-detection firm Featurespace to Visa.

On the downside, oil majors BP and Shell were pressured by reports suggesting Saudi Arabia could increase oil production.

BP fell 4.41% and Shell dropped 3.91%, with the latter also suffering from a downgrade to 'neutral' at Oddo.

Other notable decliners included British American Tobacco, down 2.81%, and Barratt Developments, which slipped 1.37%.

Both stocks, along with Rightmove and Petershill Partners, traded lower as they went ex-dividend.

Halma ended the day down 0.08%, reversing earlier gains despite reiterating its full-year guidance and reporting steady progress in the first half.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,284.91 0.20%
FTSE 250 (MCX) 21,010.44 1.23%
techMARK (TASX) 4,844.29 0.70%

FTSE 100 - Risers

Anglo American (AAL) 2,439.50p 6.16%
Prudential (PRU) 681.60p 6.14%
Antofagasta (ANTO) 2,031.00p 5.78%
Standard Chartered (STAN) 803.60p 5.29%
Glencore (GLEN) 423.05p 4.88%
Diageo (DGE) 2,614.50p 4.68%
Spirax Group (SPX) 7,490.00p 3.88%
Rio Tinto (RIO) 5,257.00p 3.55%
Weir Group (WEIR) 2,198.00p 3.29%
Entain (ENT) 770.00p 3.19%

FTSE 100 - Fallers

Shell (SHEL) 2,415.00p -4.62%
BP (BP.) 383.85p -4.10%
British American Tobacco (BATS) 2,762.00p -2.81%
BAE Systems (BA.) 1,242.50p -2.47%
Tesco (TSCO) 358.50p -2.02%
Barratt Developments (BDEV) 482.30p -1.37%
Pershing Square Holdings Ltd NPV (PSH) 3,624.00p -1.31%
Auto Trader Group (AUTO) 877.00p -1.26%
London Stock Exchange Group (LSEG) 10,260.00p -1.16%
Rightmove (RMV) 661.60p -1.10%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 473.40p 11.13%
Burberry Group (BRBY) 663.80p 8.71%
Hochschild Mining (HOC) 198.80p 6.31%
Fidelity China Special Situations (FCSS) 199.20p 6.18%
Wizz Air Holdings (WIZZ) 1,415.00p 5.20%
IP Group (IPO) 49.30p 4.89%
PZ Cussons (PZC) 94.40p 4.89%
Renishaw (RSW) 3,670.00p 4.71%
Moonpig Group (MOON) 215.00p 4.37%
Ocado Group (OCDO) 366.20p 4.00%

FTSE 250 - Fallers

Petershill Partners (PHLL) 213.00p -4.48%
Raspberry PI Holdings (RPI) 375.20p -3.70%
Future (FUTR) 1,000.00p -3.17%
Aston Martin Lagonda Global Holdings (AML) 151.40p -3.13%
Ithaca Energy (ITH) 105.00p -2.78%
Harbour Energy (HBR) 263.60p -2.61%
Endeavour Mining (EDV) 1,876.00p -1.47%
Wood Group (John) (WG.) 125.90p -1.25%
PPHE Hotel Group Ltd (PPH) 1,230.00p -1.20%
Apax Global Alpha Limited (APAX) 139.60p -0.99%