Stocks price in London were higher at midday on Thursday as rising oil prices and developments in China helped lift blue-chip oil majors and miners.
The pound weakened against the dollar, meanwhile, ahead of a key US inflation print, due out at 1330 BST.
The FTSE 100 index added 55.55 points, 0.7%, at 7,675.58. The FTSE 250 surged 196.84 points, 1.1%, at 18,073.08, and the AIM All-Share climbed 2.26 points, 0.3%, at 697.95.
The Cboe UK 100 rose 0.8% at 766.83, the Cboe UK 250 added 1.1% at 15,716.51, though the Cboe Small Companies was down 0.6% at 12,970.18.
In European equities on Thursday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.7%.
In New York, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite are all called to open 0.4% higher.
‘Inflation is on everyone’s minds today ahead of the latest figures from the US. Core CPI inflation is forecast to ease year-on-year from 4.3% to 4.1% and stay flat month-on-month at 0.3%. Any growth in the month-on-month figure would not go down well, particularly as the producer price inflation figures were hotter than expected yesterday. The market is hanging on the Fed’s every word to see if it believes rate hikes are no longer necessary,’ AJ Bell analyst Russ Mould commented.
Sterling was quoted at $1.2296 early Thursday afternoon, lower than $1.2309 at the London equities close on Wednesday. The euro traded at $1.0618, slightly lower against $1.0622. Versus the yen, the dollar rose JP¥149.15, from JP¥149.01.
The pound had spiked as high as $1.2331 following UK gross domestic product data earlier on Thursday.
The UK economy returned ever-so-slightly to growth in August, as expected, but the decline in July was slightly worse than previously estimated.
The Office for National Statistics said that gross domestic product rose 0.2% in August from July, after contracting by a revised 0.6% in July from June.
August’s reading was in line with FXStreet-cited market consensus. July’s decline was downwardly revised from 0.5% fall.
UBS said the July and August figures are ‘consistent’ with a 0.1% GDP decline quarter-on-quarter for the third-quarter of 2023. That would be below the Swiss bank’s own forecast, which predicted the UK economy to tread water over the period.
UBS analysts added: ‘Looking ahead, we remain cautious on growth in [the second half of] 2023 and early 2024. First, we expect tighter financial conditions to weigh on investment. Second, with most of the impact from higher mortgage rates yet to feed through, we expect consumption growth to be relatively subdued in [the second half of] 2023, averaging 0% quarter-on-quarter.
‘At the last meeting in September, the BoE left its policy rate unchanged at 5.25%, ending a string of fourteen consecutive rate hikes. While the [Monetary Policy Committee]’s forward guidance does not rule out additional hikes, we think the window of opportunity for hikes is now largely closed, given the shift in the BoE’s communication towards stressing the duration of policy restrictiveness and the expectation that inflation will decline further over the coming months and activity will slow down further.’
The Bank of England next decides on interest rates on November 2. The decision will be accompanied by its latest monetary policy report, setting out economic forecasts. A final decision for the year comes on December 14, though there will be no MPR on that occasion.
In London, Shell and BP climbed 1.0% and 3.0%, the latter the best FTSE 100 performer.
Brent oil was trading at $86.59 a barrel midday Thursday, higher against $85.84 late Wednesday.
SPI Asset Management analyst Stephen Innes commented: ‘With so much happening in energy markets at the moment, from an uptick in geopolitical risk to takeover mania in the Permian basin and even banning petrol cars in inner cities, it is easy for oil market tourists to get lost in the headline confusion. Oil has been off the boil for a few weeks as traders started to sniff out weakness at the pump due to the drop in refinery margins at the end of the summer driving season and ahead of a heavy refinery maintenance period. But the uptick of geopolitical risk stepped in that short-term price rebalancing lower.
‘Although the economic outlook has become cloudier given the steep sell-off in government bonds, global oil demand appears to remain on a firm footing. Barring an outright global recession led by significant downturns in the US and China (the world’s two largest consumers of crude oil), it’s challenging to see global oil demand contracting.’
Boosting the oil demand outlook was news that China’s massive sovereign wealth fund has bought stakes in the country’s biggest banks, fuelling speculation it could broaden its reach to support beleaguered mainland markets.
China’s Central Huijin Investment – an arm of the $1.4 trillion China Investment Corp – had bought $65 million of shares in the country’s banking giants.
Analysts said the purchase of stakes in Bank of China, Agricultural Bank of China, China Construction Bank and Industrial and Commercial Bank of China was aimed at boosting sentiment in mainland markets, which have been hit by worries over the stuttering economy. Huijin was also said to be planning to further boost its holdings.
The news aided mining shares also, with Rio Tinto climbing 1.9% and Glencore adding 1.0%. China is a major buyer of minerals.
Elsewhere in London, Mobico, formerly known as National Express, plunged 26%.
Mobico said it now expects annual earnings before interest and tax to come within a range of £175 million to £185 million, having previously guided for operating profit of £200 million to £215 million. It also suspended its final dividend.
Chief Executive Officer Ignacio Garat said: ‘The board is keenly aware of the importance of dividends to shareholders and the decision to suspend the final dividend was not taken lightly. The board will continue to consider the dividend position as progress is made on deleveraging.’
Restaurant Group jumped 38% after the Wagamama owner agreed to be acquired by funds managed by private equity firm Apollo Global Management, soon after itself having sold off an underperforming business.
Apollo is offering to pay 65 pence per Restaurant Group share in cash. The offer values the equity of Restaurant Group at £506 million and the company as a whole, including debt, at an enterprise value of £701 million.
The company said its board unanimously recommends the offer to shareholders, and acceptances for it already have been received from shareholders representing 19.9% of its total.
Only a month ago, Restaurant Group said it had agreed to sell its ‘challenged’ Frankie & Benny’s and Chiquito chains to the owner of Bella Italia, Las Iguanas and Banana Tree, saying this would reduce its debt and improve its profit margin.
Gold was quoted at $1,882.06 an ounce early Thursday afternoon, rising from $1,872.58 on Wednesday. The yellow metal spiked as high as $1.882.60 on Thursday morning, its best level since late-September.
A flight to safe havens following events in the Middle East continues to move gold prices higher, Swissquote analyst Ipek Ozkardeskaya commented.
The Israeli army said Thursday it was preparing for a ground assault on Hamas militants in the Gaza Strip but that the country’s political leaders had not yet taken a decision, AFP reported.
It said the military’s campaign against the Islamists was also aimed at ‘taking out’ the group’s senior leadership including top government officials.
The army has deployed tens of thousands of troops to the border with the Gaza Strip as it continues a withering air campaign it says targets Hamas infrastructure, commanders and operating centres in the enclave.
The air strikes came in response to a surprise air, land and sea assault on Saturday by Hamas fighters that left more than 1,200 people killed in Israel.
Until now, Hamas has fired more than 5,000 rockets at Israel, according to the army.
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