Some positive UK company news was combining with growing optimism that the US government will find a political solution to avert a debt default to lift share prices in London at midday on Thursday.
The FTSE 100 index was up 47.76 points, or 0.6%, at 7,770.99. The FTSE 250 was up 98.35 points, or 0.5%, at 19,313.80, and the AIM All-Share was up 2.39 points, or 0.3%, at 811.59.
The Cboe UK 100 was up 0.6% at 776.71, the Cboe UK 250 was up 0.5% at 16,883.26, and the Cboe Small Companies was up 0.6% at 13,588.50.
‘The narrative around US debt-limit negotiations has continued to gradually improve. President Biden has remained optimistic about reaching a deal, but markets are primarily following House Speaker Kevin McCarthy’s comments on the issue. He has changed his own rhetoric from stressing the two sides remained far apart to saying that achieving a deal is doable,’ said Francesco Pesole at ING.
On Wednesday, Biden said he was ‘confident’ that the two sides will reach an agreement on the budget and that America ‘will not default’.
US Treasury Secretary Janet Yellen had said on Monday that new data reinforced her previous warning of a possible US debt default on June 1 if Congress fails to raise the ceiling on borrowing.
The dollar strengthened on the back of the renewed optimism for a political accommodation, having previously also benefited as a safe-haven on worries about a default.
The pound was quoted at $1.2429 at midday on Thursday in London, lower compared to $1.2474 at the close on Wednesday.
The euro stood at $1.0808, lower against $1.0826. Against the yen, the dollar was trading at JP¥137.77, higher compared to JP¥137.47.
Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite also up 0.2%.
In London, BT Group was the worst blue-chip performer at midday, down 8.7%, as it reported a decline in annual profit and announced it will cut its workforce by as much as 55,000 staff by 2030.
The telecommunications provider said it will reduce its number of workers to between 75,000 and 90,000 by financial years 2028 to 2030 from 130,000 currently. This is a reduction of between 31% and 42%.
The plan is likely to stoke the ire of BT’s unionised workers. Last year, they walked out during industrial action by unions including the Communications Workers Union.
BT said pretax profit in the financial year that ended March 31 fell 12% to £1.73 billion from £1.96 billion. Revenue edged down 0.8% to £20.68 billion from £20.85 billion. This was 0.8% higher than the £20.51 billion estimated by Financial Times-cited market consensus, however.
Burberry shares lost 6.5%, despite the return of tourists and the reopening of China providing an expected boost to the luxury retailer’s annual results.
The British fashion house reported revenue of £3.09 billion for the year ended April 1, increasing 9.5% from £2.83 billion the year prior. Pretax profit was £634 million, increasing 24% from £511 million.
AJ Bell Investment Director Russ Mould said that the fact that Burberry hasn’t lifted its guidance for the new financial year after reporting such a strong set of results, amid reference to it being ‘mindful’ of the macroeconomic environment, appear to have been the ‘trigger’ for some investors to take profits in the stock.
JD Sports was the top blue-chip performer at midday, up 5.3% after finishing 3.7% lower on Wednesday as it reported lower annual profit.
In the FTSE 250, Aston Martin was the star performer, up 15% at 265.60p.
The luxury carmaker said that has received a ‘substantial investment’ from Chinese vehicle manufacturer Geely International.
Geely will raise its stake in Aston Martin to 17%, buying 42 million existing shares at 335p from Yew Tree, who will remain a major shareholder. It will subscribe for 28 million new shares at the same price.
In total, the investment is about £234 million. Aston Martin will receive around £95 million in cash from the subscription.
The purchase price represents a 45% premium to the closing price on Wednesday, being the last day before the announcement.
Genuit jumped 11% as the water, climate and ventilation solutions firm reported revenue in line with expectations at the start of the year on cost saving initiatives.
For the four months ended April 30, the company reported group revenue of £201.0 million, down 3.8% from £209.0 million year-on-year.
Genuit said this was in line with its expectations. It attributed the decline to market-driven volume decline of around 11%, offset by management of inflationary pressures through pricing.
Future plunged 15%. The magazine publisher reported that profit fell and its revenue flattened in the half-year that ended March 31.
Future reported an 18% fall in pretax profit to £66.4 million from £81.0 million. Revenue was flat at £404.7 million, versus £404.3 million a year prior.
Looking forward, Future said it expects full-year performance to be towards the bottom end of current market expectations, with difficult market conditions hurting audiences.
Elsewhere in London, Petrofac added 13% after it said a joint venture that it leads has been selected for a $1.5 billion petrochemical engineering, procurement and construction project in Algeria.
The award for the contract was by Step Polymers, which is a fully-owned subsidiary of Sonatrach, Algeria’s national state-owned oil company.
On AIM, MyHealthChecked surged 22%.
The consumer home-testing healthcare company said it has signed a contract with Boots UK to launch an extended range of its products on boots.com and across Boots stores in the UK. Under the agreement, Boots will stock 14 of MyHealthChecked’s different test panels, launching from May this year.
In European equities on Thursday, the CAC 40 in Paris was up 0.9%, while the DAX 40 in Frankfurt was 1.6% higher.
Brent oil was quoted at $76.78 a barrel at midday in London on Thursday, up from $75.96 late Wednesday. Gold was quoted at $1,977.10 an ounce, lower against $1,982.40.
Still to come in Thursday’s economic calendar, the US weekly unemployment claims report is published at 1330 BST.
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