Stimulus measures in China ensured there was enough optimism in the air for global equity markets for the FTSE 100 to eventually sneak into the green on Tuesday.
China on Monday urged banks and other financial institutions to provide easier terms for ailing property developers by renegotiating the terms of their loans, with the aim of ensuring homes under construction were delivered.
And on Tuesday, state-run financial newspapers said more announcements were in the pipeline as well as measures to boost business confidence.
London’s large-cap benchmark had spent much of the day in negative territory, hurt by robust UK wage data which lifted the pound. The FTSE 100 has a slew of international earners.
The FTSE 100 index inched up 8.73 points, 0.1%, at 7,282.52 on Tuesday. The FTSE 250 ended up 112.13 points, 0.6%, at 18,140.09, and the AIM All-Share closed down just 0.1 of a point at 738.62.
The Cboe UK 100 ended up 0.1% at 725.88, the Cboe UK 250 closed up 0.5% at 15,872.30, and the Cboe Small Companies ended up 0.4% at 13,489.85.
In European equities on Tuesday, the CAC 40 in Paris ended up 1.1%, while the DAX 40 in Frankfurt ended up 0.8%.
Gains of 2.0% and 2.2% for Hermes and LVMH, in a strong day for luxury retail on the China optimism, helped the CAC 40 outperform.
The pound was quoted at $1.2890 at the London equities close Tuesday, higher compared to $1.2828 at the close on Monday.
The pound surged after the latest reading of the UK jobs market. Unemployment grew but wage inflation quickened, and the data puts the Bank of England under the spotlight.
The UK jobless rate unexpectedly rose to 4.0% in the three months to May, data from the Office for National Statistics showed. Market consensus, as cited by FXStreet, had expected it to remain unchanged from 3.8% in the three months to April.
In the three months to May, annual growth in average total pay, including bonuses, accelerated to 6.9% from an upwardly-revised reading of 6.7% in the previous three-month period. May’s figures topped FXStreet-cited consensus of 6.8%.
‘The UK economy has been resilient and high employment has played a huge part in fostering that resilience. But if recession is really necessary to stamp out inflation’s smouldering embers, there are signs that it is creeping closer,’ AJ Bell analyst Danni Hewson commented.
‘Markets expect interest rates to go higher, mortgage payers are marching towards fixed rate renewal dates with a sense of dread, and employers are nervous. The mood music is changing and pretty soon bad news won’t be in the lining of good news, it will just be bad news.’
Stocks exposed to the UK consumer ended higher, amid the data showing a rise in pay. Retailers JD Sports and Next added 0.9% and 1.5%.
The euro stood at $1.0987 at the European equities close Tuesday, largely flat from $1.0984 at the same time on Monday. Against the yen, the dollar was trading at JP¥140.66, lower compared to JP¥141.52 late Monday.
In London, shares in AIM-listed STM Group surged 81% to 49.66 pence, after it said it has agreed in principle to a potential cash takeover offer worth nearly triple its closing price on Monday.
The London-based financial services provider said the possible offer from Pension SuperFund Capital is for 70 pence per share. STM shares closed at 27.50p on AIM in London on Monday.
The possible offer is from PSF Capital GP II as general partner of PSF Capital Reserve LP. PSF provides pension savings and pension risk transfers.
‘Discussions in relation to the possible offer are at a very early stage,’ STM cautioned. ‘There can accordingly, at this time, be no certainty that any offer will ultimately be made for the company.’
Mpac ended up 11%. The Tadcaster, England-based packaging and automation company assured investors that the strength of its order book, as well as the nature of projects for delivery, supported these expectations.
Year-to-date order intake stands at £62.4 million, significantly ahead of £32.8 million a year prior. Further, Mpac’s June closing order book of £78.4 million is above the 2023 opening order book of £67.2 million.
Shore Capital analysts Robin Speakman & Akhil Patel described the order intake as ‘excellent’ and confirms that the company ‘is moving back onto its prior positive trajectory’.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.5%, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.1%.
Brent oil was quoted at $79.28 a barrel at the London equities close Tuesday, up from $78.48 late Monday. Gold was quoted at $1,931.42 an ounce at the London equities close Tuesday, higher against $1,923.22 at the close on Monday.
Shares in gold miners Fresnillo and Endeavour Mining rose 1.5% and 1.3%.
In Wednesday’s UK corporate calendar, there are trading statements from pub firm JD Wetherspoon and ten-pin bowling operator Ten Entertainment Group.
The economic calendar for Wednesday has an interest rate announcement from Canada at 1500 BST, after a key US inflation reading at 1330 BST.
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