London close: Stocks rise on US debt deal optimism, China data
London stocks ended up on Thursday after the US House of Representatives overwhelmingly passed the debt ceiling bill agreed last weekend, and after the release of encouraging Chinese data.
The FTSE 100 closed up 0.6% at 7,490.27.
The bill still needs to get through the Senate and be signed by President Joe Biden ahead of the deadline to avert debt default.
Russ Mould, investment director at AJ Bell, said that for now, "relief that a US default has been averted is dominating market sentiment".
Investors were also digesting the latest data out of China, which showed that factory activity unexpectedly jumped to growth in May as demand and production improved.
The Caixin/S&P Global manufacturing purchasing managers’ index rose to 50.9 in May from 49.5 in April, beating consensus expectations of 49.5.
A reading above 50 indicates growth. The print is a sharp contrast to an official PMI released on Wednesday that showed a fall in factory activity, suggesting that China’s recovery was stalling.
On home shores, a survey showed the downturn in the manufacturing sector deepened in May.
The S&P Global/CIPS purchasing managers' index fell to a four-month low of 47.1 from 47.8 in April, but was above the flash estimate of 46.9.
The survey found that manufacturers were hit by weak domestic market sentiment, lower new export order intakes and client destocking, which offset the tapering benefits from improving supply chains.
New export orders fell for the sixteenth consecutive month in May, as overseas demand for UK manufactured products remained lacklustre.
On the upside, however, average input prices fell for the first time in three-and-a-half years.
Rob Dobson, director at S&P Global Market Intelligence, said: "Manufacturers are finding that any potential boost to production from improving supply chains is being completely negated by weak demand, client destocking and a general shift in spending in the UK away from goods to services.
"These factors are also driving a broad decrease in demand from overseas amid reports of lost orders from the US and mainland Europe. The retrenchment in export demand is also being exacerbated by some EU clients switching to more local sourcing to avoid post-Brexit trade complications."
Market participants were also mulling over the latest figures from Nationwide, which showed that house prices fell in May and were set to decline further amid rising mortgage rates.
In equity markets, heavily-weighted miners rallied, with Anglo American, Antofagasta and Rio all up as copper prices advanced.
B&M European Value Retail was a high riser for the second day in a row after results on Wednesday.
Medical products company Convatec was also up after Morgan Stanley lifted its stance on the shares to ‘overweight’ from ‘equalweight’ as it switched its preference over from Coloplast.
On the downside, bootmaker Dr Martens tanked as it posted a slump in annual earnings and said it expected lower core margins in 2024 as it incurred extra costs after blunders at its Los Angeles distribution centre.
Auto Trader lost ground as it posted a dip in full-year pre-tax profits.
National Grid, Severn Trent, Sage, Keller, Marshalls and Great Portland all fell as they traded without entitlement to the dividend.
Pennon reversed earlier losses despite saying it swung to a full-year loss as higher costs and the long hot summer weighed heavily.
FTSE 100 - Risers
Fresnillo (FRES) 677.20p 4.51%
B&M European Value Retail S.A. (DI) (BME) 529.40p 3.84%
Melrose Industries (MRO) 484.60p 3.56%
Anglo American (AAL) 2,299.50p 3.42%
Prudential (PRU) 1,091.00p 3.31%
Antofagasta (ANTO) 1,380.00p 3.18%
Convatec Group (CTEC) 209.00p 3.06%
Beazley (BEZ) 620.50p 2.48%
Rio Tinto (RIO) 4,886.00p 2.17%
Rolls-Royce Holdings (RR.) 146.40p 2.16%
FTSE 100 - Fallers
National Grid (NG.) 1,055.50p -4.57%
Ocado Group (OCDO) 352.40p -4.50%
Auto Trader Group (AUTO) 608.60p -3.40%
Severn Trent (SVT) 2,707.00p -2.38%
London Stock Exchange Group (LSEG) 8,458.00p -1.08%
3i Group (III) 1,936.50p -0.97%
Burberry Group (BRBY) 2,135.00p -0.88%
Coca-Cola HBC AG (CDI) (CCH) 2,369.00p -0.80%
Admiral Group (ADM) 2,307.00p -0.77%
Vodafone Group (VOD) 76.13p -0.31%
FTSE 250 - Risers
Trainline (TRN) 259.60p 6.05%
Investec (INVP) 429.70p 5.06%
Liontrust Asset Management (LIO) 795.00p 4.37%
Chemring Group (CHG) 266.00p 4.11%
Carnival (CCL) 813.60p 3.83%
Harbour Energy (HBR) 233.20p 3.74%
TBC Bank Group (TBCG) 2,385.00p 3.70%
Close Brothers Group (CBG) 941.50p 3.64%
Bakkavor Group (BAKK) 92.80p 3.11%
Molten Ventures (GROW) 299.80p 3.09%
FTSE 250 - Fallers
Dr. Martens (DOCS) 138.00p -11.71%
Aston Martin Lagonda Global Holdings (AML) 264.40p -6.90%
Hilton Food Group (HFG) 684.00p -6.04%
Ithaca Energy (ITH) 138.60p -3.88%
Auction Technology Group (ATG) 741.00p -3.77%
Marshalls (MSLH) 293.80p -3.04%
IP Group (IPO) 55.30p -2.30%
Direct Line Insurance Group (DLG) 162.80p -2.20%
TI Fluid Systems (TIFS) 119.40p -1.81%
Tullow Oil (TLW) 24.40p -1.77%