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FTSE 100 closes ahead as traders mull weak US data, Fed announcement and precious metals rise

The UK index of premier shares finished over 61 points higher, or 0.88%, at 7,078, off the session peak of 7,093 and above the low of 7,008

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  • FTSE 100 closes ahead
  • Rentokil leads the FTSE risers
  • BT drops sharply after results

5.01pm: FTSE closes up

FTSE 100 closed ahead on Thursday with mining stocks doing well as precious metals prices rose after lacklustre US GDP data and traders pondered over yesterday's a non-committal Federal Reserve announcement.   

The UK index of premier shares finished over 61 points higher, or 0.88%, at 7,078, off the session peak of 7,093 and above the low of 7,008.

The midcap FTSE 250 also closed up, building on its recent record highs, adding around 44 points, or 0.19%, to 23,050.

"Bad news is good news for investors today, with a raft of underwhelming data out of the US allaying concerns over a tightening of the monetary tap at the Federal Reserve," said Joshua Mahony, senior market analyst at online trading firm IG.

"Yesterday’s FOMC meeting largely delivered a message for both sides, with Powell’s plans to hold off on tapering talk undermined by the economic improvements which point in that direction. Nonetheless, that economic recovery touted by Jerome Powell looks to be on unstable ground, with a second-quarter GDP reading of 6.5% falling well short of the 8.5% widely expected."

On Wall Street, the Dow Jones Industrial Average gained over 185 points at 35,114, the S&P 500 added over 24 at 4,424. The tech-laden Nasdaq index advanced around 57 points at 14,819.

Among the notable FTSE risers was mining titan Anglo American, which saw shares add 5.36% to 3,293p.

3.50pm: Corporate news helps lift UK market

Leading shares continue their positive run, with the FTSE 100 up 62.08 points or 0.88% at 7078.71.

The optimistic mood has been helped by a number of upbeat company results, as well as a move higher on Wall Street.

The Dow Jones Industrial Average is currently up 174 points or 0.5%, the S&P 500 has added 0.57% and the Nasdaq Composite is 0.44% better, despite the disappointing US GDP figures.

The day has been dominated by corporate updates.

Investors welcomed the latest news from Rentokil Initial PLC (LSE:RTO), up 7.09%, Informa PLC (LSE:INF), 6.03% higher, Anglo American PLC (LSE:AAL), adding 5.68%, Royal Dutch Shell (NYSE:RDS.A) PLC, rising 4.41%, Relx PLC, 3.1% better and Compass PLC, climbing 3.04%.

Michael Hewson, chief market analyst at CMC Markets UK, said: "We’ve seen an avalanche of earnings updates today, most of them greeted with positivity, helping to push European markets and the FTSE 100 to its second day of gains after a poor start to the week.

"With the FTSE 250 already at record highs the FTSE 100 has been very much the odd one out when it comes to record highs; it is currently well below the levels we saw over three years ago, when it was at the heady heights of 7,900.

"With private equity companies already sniffing around some of the more undervalued sectors of the UK economy, maybe some of today’s updates could raise optimism that there still remain a significant number of UK companies that may have further to go in terms of share price upside."

But it was not all plain sailing. In particular, BT PLC faced an adverse reaction to its figures, down 7.58%, while Smith & Nephew PLC (LSE:SN) fell 6.04% and Weir PLC was 5.78% lower.

3.10pm: Crude edges higher

Oil prices are edging higher, with Brent crude up 0.54% at $75.14 a barrel and West Texas Intermediate - the US benchmark - rising by the same amount to $72.78.

Craig Erlam, senior market analyst at OANDA Europe, said: "Strong earnings and a cautious US central bank bodes well for crude, which saw the rally slow heading into Fed day. Oil is now closing in on its early July high so we could see the rally slow in the coming sessions after a remarkable bounceback.

"The price plunged around 15% in the two weeks that followed the peak but most of this lost ground has now been made up again. The biggest downside risk to oil prices now is unsurprisingly the delta variant rapidly spreading and weighing on the economic recovery going into the end of the year."

2.42pm: Wall Street opens higher despite GDP miss

The main indices on Wall Street opened in the green on Thursday despite both the US GDP and jobless claims figures falling short of market predictions.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.62% at 35,142 while the S&P 500 climbed 0.39% to 4,417 and the Nasdaq rose 0.12% to 14,779.

Commenting on the surprise miss on GDP,  Ali Jaffari at Validus Risk Management said: “Despite strong demand evident by consumer spending (which exceeded expectations), GDP growth lagged estimates due to lower inventories, highlighting the continued supply bottlenecks in the overall economy."

Back in London, the FTSE 100 pushed higher into late afternoon, rising 72 points to 7,088 at around 2.40pm.

1.54pm: US economic news falls short

Some disappointing economic news from the US.

The country's economy grew by an annualised 6.5% in the second quarter, up from 6.4% but well shy of the expected 8.4%.

The personal consumption expenditures index - a measure of inflation - rose from 2.5% to 6.1% although this was in line with expectations.

 

Meanwhile weekly jobless claims fell, but much less than expected.

The number of Americans seeking unemployment benefits dropped by 24,000 last week to 400,000, but this was higher than the forecast figure of 385,000.

The previous week's figure, which already showed an unexpected increase, was revised up from 419,000 to 424,000.

The four week moving average climbed by 8,000 to 394,500.

 

Wall Street seems fairly unmoved by the news, perhaps on the basis the US economy is not overheating and the Federal Reserve will therefore be even less likely to raise interest rates any time soon.

The Dow Jones Industrial Average is  expected to rise by 134 points or 0.34% but the S&P 500 has improved to an expected 0.15% rise at the open, while the Nasdaq Composite has recovered some ground and is indicated down just 0.07%.

Meanwhile the FTSE 100 is currently up 65.19 points or 0.93% at 7081.82.

12.31pm: Investors await US growth and jobs figures

Wall Street is set for a mixed opening despite the US Federal Reserve showing no signs of rushing to remove its support for the economy.

The Dow Jones Industrial Average is forecast to climb 137 points or 0.35% but the S&P 500 is expected to open just 0.1% higher, while the Nasdaq Composite is indicated 0.26% lower.

The fall in the Nasdaq comes as two of its constituents are expected to open lower.

Facebook is down nearly 3.5% in pretrading following its results after the market closed on Wednesday, while PayPal (NASDAQ:PYPL) is also lower, down more than 5%. Both warned of a slowdown in growth, which has not gone down well.

Meanwhile Amazon is due to report results after the market closes today. The second quarter figures are expected to show strong growth after its Prime Day sales event was brought forward from July to June, and they will also be the last overseen by Jeff Bezos, who stepped down as chief executive at the start of this month.

There is also the small matter of the debut of trading platform Robinhood, which yesterday priced its shares at the lower end of the expected range.

Michael Hewson at CMC Markets UK said: "It’s.. a big day for Robinhood as it gets set for its first day of trading as a public company, when the US markets open later this afternoon, in what is expected to be one of the biggest IPO’s this year, after Coinbase’s direct listing. It’s a particularly challenging time for IPO’s with sentiment as it is now and given how, after a lot of hype, Coinbase is now trading below its $250 indicative price after a big surge on day one."

Before that come more indicators of the state of the US economy.

The latest GDP figures are expected to show the economy grew by an annualised 8.5% in the second quarter, following a 6.4% increase in the previous three months, helped by stimulus cheques from the government.

Also due are the weekly jobless claims, which rose unexpectedly to 419,000 last time round but are forecast to fall back to 385,000.

Back in the UK and the FTSE 100 is up 62.23 points or 0.89% at 7078.86, not far off the day's peak of 7087.

11.56am: Record numbers pinged by NHS app last week

You can see why companies are complaining about staff shortages.

New figures show the pingdemic is getting worse, with a record 689,313 alerts sent to users of the NHS COVID-19 app in England and Wales in the week up to 21 July.

That compares to 618,903 the previous week.

Alan Thomas, chief executive of insurance provider Simply Business said:  “The ‘pingdemic’ is proving another obstacle for small businesses in their recovery from the impact of COVID-19. The number of staff – and indeed self-employed people – in isolation is a major issue across every industry, and up and down the country we’re seeing businesses temporarily close due to record levels of self-isolation...

"Our research shows small and medium sized enterprises expect to lose £22,461 each on average in lost earnings, equating to a £126.6bn hole in the books of small businesses. With the ‘pingdemic’ in full force, this figure could rise even higher.”

11.28am: Company results dominate risers

Leading shares continue to move higher, with the FTSE 100 now 63.80 points or 0.91% higher at 7080.43, a high for the day.

Company results continue to dominate, with Anglo American PLC (LSE:AAL) now in pole position, up 4.85%.

Rentokil Initial PLC (LSE:RTO) has risen 4.78% and Royal Dutch Shell (NYSE:RDS.A) PLC is 4.16% better.

Information group Relx PLC is up 3.44% after it said first half profits rose from £909mln to £953mln.

But BT Group PLC (LSE:BT.A) continues to slide, and is now down 8.73%.

 

10.53am: Mortgage lending hits record

The stamp duty holiday which began to be tapered at the end of June gave a boost to mortgage lending in that month.

Bank of England figures show it rose to £17.9bn from £6.6bn May, the largest figure since records began in 1993 and much higher than the £7.9bn expected by economists.

Approvals for house purchases slipped from 87,500 to 81,300

 

Meanwhile unsecured lending to consumers rose by £300mln in June, well below the pre-pandemic average.

 

10.30am: Pingdemic and chip shortages hit car production

June car production fell to its second lowest level for nearly 70 years, according to the Society of Motor Manufacturers and Traders.

Just over 69,000 cars were produced in UK plants last month, the worst performance since 1953 apart from last year when the industry was slowly recovering from the first lockdown.

Shortages of staff due to the pingdemic and key components combined to produce a 38% fall in six month output to 498,923 vehicles.

And the trade body warned that the global shortage of semiconductor chips could mean 100,000 fewer cars being produced this year than previously expected.

 

 

9.35am: Mixed reaction to company news

Leading shares continue on their merry way upwards, with the FTSE 100 now up 39.96 points or 0.57% at 7056.59.

Company results are dominating and it is fair to say there has been a mixed response to the announcements.

But so far the postive is ouweighing the negative.

Investors have welcomed the latest updates from Anglo American PLC (LSE:AAL), ahead by 4.64% as it announced a share buyback and special dividend worth US$2bn, Rentokil Initial (LSE:RTO) PLC, up 4.25% after it said its core businesses had returned to growth and Informa PLC (LSE:INF), 3.72% higher.

But medical technology group Smith & Nephew PLC (LSE:SN) has lost 6.4% despite moving back into profit, on concerns that COVID-19 could continue to constrain surgery volumes.

BT PLC has not recovered, down 5.68%, while engineer Weir PLC has lost 3.34%.

The day's two top flight ex-dividend companies have fallen back, with SSE PLC (LSE:SSE) down 4.01% and Royal Mail PLC (LSE:RMG) 1.79% lower.

But overall the mood is positive, and the sell-off earlier in the week due to China's regulatory clampdown seems a long time ago.

 Danni Hewson, financial analyst at AJ Bell, said: “After the debacle involving a big sell-off in China-related stocks, Asian markets staged a big comeback with Hong Kong’s Hang Seng index up 3.1% and China’s SSE advancing by 1.5% on chatter that Beijing wouldn’t be overtly draconian towards Chinese companies with listings in foreign markets if they kept in line with local laws.

“Regulatory interference has been behind the recent slump in China-related stocks and there have been growing fears this would lead to investors turning their backs on the growing number of Chinese companies listed in places like New York."

8.30am: Shell and Lloyds help lift markets

UK markets have made a bright start to a busy day.

The FTSE 100 is up 31.92 points or 0.45% at 7048.55 in early trading.

Meanwhile the more domestically focused FTSE 250, which hit an intraday high on Wednesday before falling back, is up 49.64 points or 0.22% at 23,056.09.

Investors were encouraged by signs that the US Federal Reserve was in no hurry to remove its support for the economy.

Strategist Jim Reid at Deutsche Bank (NYSE:DB) said: "As expected, the Federal Open Market Committee voted unanimously to keep interest rates unchanged and maintained their asset purchases at $120bn a month. However, we did see the beginning of an initial nod towards a tapering of asset purchases at some point, with the statement after the meeting saying that “the economy has made progress” toward the Fed’s goals of maximum employment and price stability, and that “the Committee will continue to assess progress in coming meetings.”

"Even with that nod however, the market reaction was fairly subdued and investor expectations of future rate hikes remained in line with where they’d been the previous day."

There was support from a number of major companies reporting results.

Royal Dutch Shell (NYSE:RDS.A) PLC rose 2.9% or 40.8p to 1446.4p after it reported second quarter earnings of US$5.5bn, up from US3.2bn, boosted by the recovering oil price. It also raised its dividend and began a US$2bn share buyback programme.

Lloyds Banking Group PLC (LSE:LLOY) was lifted 1.1% or 0.51p to 47.3p as it beat expectations with a first half profit of £3.9bn compared to a loss of £602mln.

Richard Hunter, head of markets at interactive investor, said “Lloyds is riding the wave of generally improving conditions, upping its guidance for the year with further bad loan releases boosting its numbers...

"Lloyds has demonstrated again that it has a firm hand on the tiller and is well capitalised to weather any immediate storms."

But BT Group has slumped 4.68% or 8.6p to 175.35p. The telecoms group saw a 3% fall in first quarter revenues while profits dropped 4% to £536mln as its global operations dragged on the rest of the business.

6.46am: European markets called slightly lower

The FTSE 100 is seen just a sliver lower ahead of Thursday’s open as global equities found some support.

CFD firm IG Markets has the London benchmark on the back foot, down 4 points, making a price of 7,013 to 7,016 with just over an hour to go until the open.

It comes after Wednesday provided some relief from the choppy trading seen at the start of the week.

Michael Hewson, chief market analyst at CMC Markets UK, said: “US markets finished the day mixed, with the Nasdaq outperforming after the latest Fed decision moved the bond tapering argument onto Jackson Hole next month, while markets in Asia rebounded strongly on reports that Chinese regulators told firms that Chinese firms would be allowed to list in the US as long as they met listing requirements.

“The rebound in Asia doesn’t appear to be translating into a rebound in Europe with shares here set to open slightly lower.”

The Dow Jones finished Wednesday down 127 points or 0.36% at 34,930 whilst the S&P 500 dipped just 0.01% to end the session at 4,400.

At the same time, the Nasdaq rose by 102 points or 0.7% to finish at 14,762. Similarly, the small-cap focussed Russell 2000 index added 1.51% to 2,224.

In Asia, Japan’s Nikkei climbed 177 points or 0.64% to 27,757 and Hong Kong’s Hang Seng advanced 790 points or 3.1% to 26,264. The Shanghai Composite moved up 1.4% to 3,408.

Around the markets

The pound: US$1.3937, up 0.25%

Gold: US$1,817 per ounce, up 0.48%

Silver: US$25.29 per ounce, up 0.98%

Brent crude: US$75.16 per barrel, up 0.9%

WTI crude: US$72.82 per barrel, up 1.6%

Bitcoin: US$40,200, up 0.35%

6.50am: Early Markets - Asia / Australia

Stocks in the Asia-Pacific region were higher on Thursday after the U.S. Federal Reserve left its benchmark interest rate close to zero.

The Shanghai Composite in China surged 1.40% and Hong Kong’s Hang Seng index jumped 3.37%

In Japan, the Nikkei 225 gained 0.66% while South Korea’s Kospi rose 0.15%.

Shares in Australia lifted, with the S&P/ASX 200 trading 0.50% higher.

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