FTSE 100 shares closed higher on Thursday in tandem with a US equity rally after President Donald Trump announced “phenomenal” corporate tax reform Wall Street had been waiting for with bated breath.
The blue-chip FTSE 100 closed up 0.6% at 7229 and led by Royal Bank of Scotland Group plc (LON:RBS) up 2.5% at 233.1p still basking in broker Deutsche Bank’s decision on Wednesday to upgrade to hold with a target price of 220p, since exceeded.
Donald Trump said the administration plans to make a corporate tax announcement over the next two to three weeks, a move that has been eagerly-awaited by Wall Street.
The US president said during a meeting with US airline executives that the policies would seek to roll back “burdensome regulations”, while “lowering the overall tax burden of American businesses.”
Trump said that the scheme would be “phenomenal in terms of tax”.
Expectations that the property developer cum politician will cut the US corporate tax rate — currently at 35%, among the highest across developed countries — has been one factor in the post-election rally that has sent US stock prices to record highs and driven Treasuries lower.
The mid-cap FTSE 250 closed up 0.1% at 18,627 and led by International Personal Finance Plc (LON:IPF) up 5.2% at 186.8p.
The FTSE AIM 100 Index ended up 0.2% at 4312 and the FTSE AIM All-Share Index up 0.2% at 899.
London gainers were ahead at 34% of the bourse and losers 29%.
1535 GMT - FTSE 100 extends gains as US stocks advance with oil price rally
FTSE 100 rises 34 points
Oil majors recover with crude prices
Smith & Nephew weak after results
3.30pm … US stocks boost …
The FTSE 100 index held firm in late afternoon trading as US stocks pushed higher in early deals, helped by a rally in oil prices following yesterday’s retreat.
Around 3.30pm, the UK blue chip index was over 34 points higher at 7,223, near the day’s peak, recovering after Wednesday’s wobble.
On Wall Street, the Dow Jones industrials also rallied, gaining around 65 points at 20,118, while the tech-laden Nasdaq extended its recent records with a 23 point advance.
The main lift came from a recovery in crude prices, which gained over 1% at back around US$56 a barrel having fallen yesterday after strong US inventories data.
Today’s US data showed weekly jobless claims near a 43-year low, dropping by 12,000 to a seasonally adjusted 234,000 for the week ended February 4.
Dennis de Jong, managing director at UFX.com, said: “Donald Trump continues to place jobs at the heart of his successful run at the presidency, and he will breathe a sigh of relief at today’s downtick in initial jobless claims which are the lowest since November 2016.”
He added: "Readings of sub-300,000 tend to indicate a healthy labour market, and we are currently enjoying an almost two-year stretch below that watershed - the longest since 1970.”
11.45am … Footsie higher as oil recovers …
The Footsie pushed higher in late morning trading, helped by a rally in oil prices following yesterday’s retreat by crude, although the underlying mood remained cautious.
Around 11.35am, the FTSE 100 index was over 24 points higher at 7,213, just below the session peak of 7,214.89.
The main lift came from a recovery in crude prices, which recaptured the US$55 a barrel level after dipping below that barrier after strong US inventories data.
Oil major BP PLC (LON:BP) rallied, adding 1.1%, or 5.2p at 461.2p, having fallen back after disappointing fourth-quarter results on Tuesday.
Drugs blue chip GlaxoSmithKline LC (LON:GSK) was also higher, up 1.4%, or 22.0p at 1,584.5p following its fourth-quarter numbers yesterday.
But medical devices group Smith & Nephew PLC (LON:SN.) was a big FTSE 100 faller, shedding 2.3%, or 28p at 1,173p after its 2016 trading profits missed forecasts weighed by tough market conditions in China and the Gulf States.
8.40am ... Unspectacular start ...
The FTSE 100 got off to a solid if unspectacular start with a 14 point gain to move over the 7,200 threshold once more.
At 8.30am the index of blue-chip shares was 7,202.8, defying the drift seen in the US and Asia overnight.
On the results front, replacement hip specialist Smith & Nephew’s (LON:SN.) prelims failed to inspire an the stock was marked down more than 3% in early trade.
Meanwhile the financial stocks – led by Barclays (LON:BARC) and Aviva (LON:AV.) – led the Footsie higher.
In the second-tier investors weren’t enamoured of the latest update from holiday giant Thomas Cook (LON:TCG) as the shares were marked down 6%, which also put the skids under low-cost carrier easyJet (LON:EZJ).
Finally, among the tiddlers Asiamet Resources (LON:ARS) appears to have the messaging correct with its latest update with stock up 9% early on.
The geologists continue to hit high grade copper at the company’s flagship project in Indonesia, investors were told earlier.
6.45am ... Dull start predicted ...
An indecisive start looks in store for UK equities after mixed signals from abroad.
In the US, the S&P 500 recovered from a weak start to post a two point gain at 2,295, but the Dow Jones average remained in the red, shedding 36 points at 20,054.
In Japan, the Nikkei 225 was 80 points lower at 18,928 towards the end of trading, but in Hong Kong, the Hang Seng was 57 points to the good at 23,542.
Small wonder, then, that spread betters do not quite know what to make of the Footsie’s prospects at the outset; the current view is to expect a small gain of arond 11 points at 7,199.
Results-wise, there is nothing scheduled that is likely to influence the index in the same way as Tuesday’s update from BP.
Fund manager Ashmore group PLC (LON:ASHM) releases interims, while sector peer Henderson Group PLC (LON:HCG) issues a full-year report.
Hip and knee replacement specialist Smith & Nephew PLC (LON:SN.) also issues its finals, with David Adlington, an analyst at JP Morgan Cazenove, expecting to see a weaker fourth quarter (partly because of having four fewer trading days).
Foreign exchange head-winds are also likely to be a feature.
On the other hand, there have been generally better than expected reporting across the sector from the likes of Zimmer and Stryker.
Earlier this week, Adlington said: “We update our FY17 revenue forecasts for the latest FX rates, which leads to small downgrades given c2% head-winds.
“Bloomberg consensus does not appear to have captured this head-wind – it is looking for c3% reported growth, and 5% underlying growth is unlikely in our view.”
“We believe we are likely to get some further colour at these results, but this likely represents an additional small downside risk given consensus is looking for c50bp of margin expansion.”
Around the markets
- Sterling: US$1.2507, down 0.33 cents
- 10-year gilt yield: 1.317%
- Gold: US$1,242.20 an ounce, up US$2.70
- Brent crude: US$55.37 a barrel, up 25 cents
Headlines
- UK sets timetable for launch of 5G networks – Financial Times
- Eni chief Claudio Descalzi charged with international corruption – Financial Times
- Volkswagen threatens legal action against former Chairman – Financial Times
- Aldi to invest extra $1.6 billion in US expansion – Financial Times
- Volvo’s record results help it gear up for flotation – Daily Telegraph
- Sir Stelios Haji-Ioannou set to grill easyJet board over sale of 10 aircraft – Daily Telegraph
- Goldman hedges its bets with New York move – The Times
- McLaren to create 200 jobs in Sheffield with new £50 million plant – The Guardian
- Candy brothers accused of blackmail and extortion in high court – The Guardian
- Hundreds of Waitrose jobs may go as retailer plans six store closures – The Guardian
- Sports Direct falls victim to cyber-attack but fails to tell workers – The Independent
- Goldman Sachs claims Trump trade war would hurt U.S. and Chinese growth – The Independent