Stocks were in the green at the London close on Thursday as the House of Representatives approved the US debt ceiling deal and eurozone inflation came in lower than expected.
With a vote of 314-117, the bill now heads to the Senate. AJ Bell’s Russ Mould said the approval by the House ‘virtually guarantee[s]’ that the debt ceiling will be signed off ahead of the extended June 5 default deadline.
The FTSE 100 index closed up 44.13 points, or 0.6% at 7,490.27 on Thursday. The FTSE 250 ended up 104.86 points, or 0.6%, at 18,827.76. The AIM All-Share closed up 1.68 points, or 0.2%, at 784.45.
The Cboe UK 100 ended up 0.7% at 748.58, the Cboe UK 250 closed up 0.7% at 16,401.80, and the Cboe Small Companies ended up 0.7% at 13,110.00.
Fresh eurozone inflation data also gave investors cause for optimism on Thursday, with both headline and core eurozone inflation prints coming in lower than expected.
According to a preliminary estimate from Eurostat, the harmonised index of consumer prices rose by 6.1% in May from a year before, cooling from a 7.0% annual rise in April.
Market consensus, according to FXStreet, had been expected a reading of 6.3%.
Core inflation - which excludes volatile categories of energy, food, alcohol and tobacco - fell to 5.3% from 5.6%. Market consensus had anticipated a reading of 5.5%.
Jack Allen-Reynold, deputy chief eurozone economist at Capital Economics, said the declines in the eurozone inflation rate will be unlikely to stop the ECB from raising interest rates in June ‘and probably July.’
This belief was almost confirmed in the latest minutes of the European Central Bank Governing Council meeting, released on Thursday, with members early last month arguing that a pause in its tightening cycle would be unwise.
‘We are getting a bit closer to our cruising altitude, not there yet, and that means that we need to continue climbing, but not as rapidly,’ said ECB President Christine Lagarde.
The ECB is set to unveil its next decision on June 15. Markets are expecting another hike of 25 basis points.
In European equities on Thursday, the CAC 40 in Paris ended 0.6% higher, while the DAX 40 in Frankfurt ended up 1.2%.
In London, B&M European Retail was one of the top blue-chip performers at the close on Thursday, ending 3.8% higher.
On Wednesday, the variety goods value retailer reported lower-than-expected annual profit but higher revenue as it benefited from consumers focusing on frugality amid the cost-of-living crisis.
Auto Trader was amongst the worst blue-chip performers, closing down 3.8% despite sharing annual results that met market expectations.
The digital automotive marketplace said revenue in the financial year ended March 31 climbed 16% year-on-year to £500.2 million from £432.7 million.
The figure came in just ahead of company-compiled analyst consensus of £499.9 million. It was driven by Auto Trade revenue, which rose 9%, and also benefitted from £27.2 million from Autorama - a UK-based digital leasing platform focused on new vehicles the firm acquired last June.
Less positively, pretax profit fell 2.5% to £293.6 million from £301.0 million.
In the FTSE 250, Dr Martens plunged 12% after it posted a disappointing set of annual results amid a challenging consumer environment and operational mistakes at its Los Angeles distribution centre.
The boot maker posted pretax profit of £159.4 million for the year ended March 31, down 26% from £214.3 million the previous year.
The company said this was due to increased depreciation from system investments, a £3.9 million impairment charge and a £10.7 million charge from the foreign exchange market translation impact on its Euro bank debt.
This was worsened by the supply bottleneck at the Los Angeles distribution centre, with people and process failures leading to missed wholesale shipments, and costs of GP15.0 million in the year, with another £15.0 million expected in financial 2024.
Elsewhere in London, ME Group International jumped 8.9% after it increased its full-year outlook following an unexpectedly strong performance over the last six months, with profit and revenue jumping in part due to increased photo booth use.
The instant-service equipment firm now expects revenue between £300 million and £320 million, compared to previous guidance of revenue of between £280 million and £300 million.
Pretax profit is expected to be between £64 million and £67 million, up from a previous range of £61 million to £65 million.
On AIM, Amur Minerals plummeted 89% to 0.21 pence after Ascent Resources said it wants to buy the firm in an all-share deal.
Ascent is a Latin America and Europe-focused energy and natural resources company. Amur is a Russia-focused nickel copper sulphide explorer.
The all-share offer of 1 new Ascent share for every 21 Amur shares valued Amur - at the time of the announcement - at 0.175p per share plus a 1.8p dividend. This would be a premium of 7.3% to Amur’s closing price of 1.840p on Wednesday.
Ascent Resources ended flat.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.3%, the S&P 500 index up 0.6%, and the Nasdaq Composite 0.7% higher.
The dollar, meanwhile, was weaker as expectations for the trajectory of US interest rates were reassessed following comments from a senior Federal Reserve official.
The pound was quoted at $1.2523 at the London equities close on Thursday, up from $1.2381 at the close on Wednesday. The euro stood at $1.0737, higher against $1.0657. Against the yen, the dollar was trading at JP¥138.88, lower compared to JP¥139.83.
Fed governor Philip Jefferson told a conference in Washington that ‘skipping a rate hike at a coming meeting would allow the [Federal Open Market] Committee to see more data before making decisions about the extent of additional policy firming.’
Jefferson added that ‘a decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have reached the peak rate for this cycle,’ suggesting he did not think the Fed was necessarily done with interest-rate hikes going forward.
Following his comments, markets now see a 74% chance of the Federal Reserve holding interest rates steady at its next meeting. Last week, markets only saw a 48% chance of such an outcome.
Brent oil was quoted at $74.35 a barrel at the London equities close on Thursday, up from $73.07 late Wednesday. Gold was quoted at $1,978.50 an ounce, higher against $1,971.75 at the close on Wednesday.
In Friday’s UK corporate calendar, there are full-year results from Nostrum Oil and Gas. The economic calendar has the US employment report at 1330 BST.
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