London’s FTSE 100 ended solidly higher on Thursday, building on Wednesday’s advance, as stocks with an exposure to China shone.
Though the data recently from the world’s second-largest economy has underwhelmed, investors were optimistic about China’s prospects on Thursday, amid the hope that stimulus is on the way.
The FTSE 100 index closed up 57.85 points, 0.8%, at 7,646.05. The FTSE 250 ended down 10.79 points, 0.1%, at 19,311.73, and the AIM All-Share closed down 0.2%, or 1.83 points, at 764.29.
The Cboe UK 100 ended up 0.7% at 763.37, the Cboe UK 250 closed up marginally at 16,942.85, and the Cboe Small Companies ended up 0.5% at 13,697.09.
The pound was quoted at $1.2851 at the London equities close Thursday, lower compared to $1.2890 at the close on Wednesday.
Stocks on Thursday extended gains, after closing markedly higher on Wednesday following a UK inflation slowdown. The reading showed consumer prices rose 7.9% annually in June, cooling from 8.7% the month before, and below the FXStreet cited estimate of 8.2%.
Commodity stocks ended the day higher. Anglo American closed up 3.3%.
The miner said production rose 11% year-on-year in the second quarter, which reflects the ramp-up of its new Quellaveco copper mine in Peru. The mine has now reached commercial production levels. It also noted a strong showing from its Minas-Rio iron ore operation in Brazil, and higher production from its Australian open-cut operations in steelmaking coal.
Fellow miner Glencore ended up 4.2%. Antofagasta rose 2.7%, more than recovering its 1.4% fall it suffered on Wednesday after it lowered output guidance.
China optimism lifted Burberry too. The trench coat maker rose 2.0%.
The People’s Bank of China on Thursday held its one-year loan prime rate - which serves as a benchmark for corporate loans - at 3.55%. The five-year rate remained at 4.20%.
Pantheon Macroeconomics analyst Duncan Wrigley commented: ‘The mid-year Politburo meeting, likely to take place next week, will review the H1 economic situation and set out the policy direction for H2. China’s recovery is stalling, but we do not sense any panic. The services sector is still growing, just at a slower rate, while the industrial sector is cooling. We think policymakers will supplement the lending rate cuts with targeted fiscal, quasi-fiscal and targeted monetary policy support.’
In the FTSE 250, easyJet closed down 3.9%.
In its third quarter ended June 30, the Luton Airport-based low-cost airline said revenue jumped 34% to £2.36 billion from £1.76 billion a year earlier. easyJet swung to a headline pretax profit of £203 million from a loss of £114 million.
Looking ahead, easyJet said that based on current booking trends, it expects to deliver a ‘record’ pretax profit in its final quarter of its financial year. Although, it noted that this guidance is subject to the operational environment with the whole industry seeing challenging conditions this summer.
Chief Executive Officer Johan Lundgren tried to reassure investors and holidaymakers, saying: ‘We are absolutely focused on mitigating the impact of the challenging external environment on our customers and flying them on their well-earned holidays.’
Among London’s small-caps, Kier Group rose 5.3%.
The Manchester, England-based construction firm said revenue and profit for its year ended June 30 were in line with expectations, and that the year-end order book was above £10.0 billion.
‘The group’s financial 2023 results are anticipated to be in line with the board’s expectations, reflecting a strong operational performance despite inflationary pressure. The company remains confident it can continue to mitigate these pressures going forward,’ Kier Group said.
On AIM, Portmeirion closed down 26%, after a profit warning.
The Stoke-on-Trent, England-based pottery maker said it expects sales for the first half of the year to be down 3.3% to £44 million from £45.5 million a year prior. Portmeirion partly attributed this to increased caution from customers in the US and Canada, with sales for the North American region down by 14% from a year before.
Looking ahead, Portmeirion said it expects profit for 2023 to be ‘significantly’ below market expectations, but noted its balance sheet remains strong and remains focused on long-term growth.
Stocks in New York were mixed at the London equities close. The Dow Jones Industrial Average was up 0.8%, whilst the S&P 500 index down 0.3%, and the Nasdaq Composite down 1.1%.
In the US, the number of employment insurance initial claims fell from a week earlier on a seasonally-adjusted basis, according to the US Department of Labor on Thursday, while the unemployment rate was steady.
The number of initial claims fell to 228,000 in the week that ended July 15, this past Saturday, from 237,000 a week earlier.
Johnson & Johnson shares shot up 5.7% in New York. It raised its full-year guidance after reporting a ‘robust’ second quarter, with solid rises in earnings and sales.
The New Brunswick, New Jersey-based pharmaceutical and consumer goods firm reported net earnings of $5.14 billion in the second quarter of 2023, up 6.9% from $4.81 billion a year prior.
Diluted earnings per share rose by 8.9% to $1.96 from $1.80.
Second quarter sales climbed 6.3% year-on-year to $25.53 billion from $24.02 billion.
Sales in 2023 are now expected between $98.8 billion and $99.8 billion, up from previous guidance of between $97.9 billion and $98.9 billion. Sales in 2022 were $94.94 billion.
In European equities on Thursday, the CAC 40 in Paris ended up 0.8%, while the DAX 40 in Frankfurt rose 0.6%.
The euro stood at $1.1144 at the European equities close Thursday, lower against $1.1197 at the same time on Wednesday. Against the yen, the dollar was trading at JP¥140.31, higher compared to JP¥139.65 late Wednesday.
Brent oil was quoted at $79.33 a barrel at the London equities close Thursday, down from $80.39 late Wednesday. Gold was quoted at $1,969.54 an ounce at the London equities close Thursday, down against $1,975.43 at the close on Wednesday.
In Friday’s UK corporate calendar, there are trading statements from Close Brothers and Petershill Partners.
The economic calendar for Friday has UK retail sales and public sector finances data at 0700 BST.
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