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(Alliance News) - The FTSE 100 managed to overcome sharp share price losses for Rolls-Royce and oil majors on Thursday, spurred higher by US stimulus hopes.
The FTSE 100 index closed up 13.35 points, or 0.2%, at 5,879.45. The FTSE 250 ended up 68.16 points, or 0.4%, at 17,383.46, and the AIM All-Share closed up 4.87 points, or 0.5%, at 964.60.
The Cboe UK 100 ended up 0.1% at 584.68, the Cboe UK 250 closed up 0.4% at 14,719.17, and the Cboe Small Companies ended up 0.7% at 9,236.51.
In European equities on Thursday, the CAC 40 in Paris ended up 0.4%, while the DAX 30 in Frankfurt ended down 0.2% - with Germany's headline stock index bogged down by a 13% slump in Bayer shares.
"It's been a very US-centric week so far and that's unlikely to change, with stimulus talks continuing and Friday's jobs report being of great interest," said Craig Erlam, senior market analyst at Oanda.
"It's the former that's getting investors excited over the last 24 hours, with the Democrats and Republicans seemingly edging gradually closer to a deal," said Erlam. "The talks have moved at a snails pace and there's still a significant difference between the packages the two are proposing, but they are heading in the right direction."
A meeting between US Treasury Secretary Steven Mnuchin and Democratic House Speaker Nancy Pelosi on Wednesday failed to resolve a deadlock on additional aid to the US economy, but the two sides agreed to keep talking.
US President Donald Trump's administration and Democratic leaders have been at a stalemate for months on a follow-up to the USD2.2 trillion CARES Act passed as the coronavirus pandemic intensified in March.
The Treasury secretary "and I had an extensive conversation and we found areas where we are seeking further clarification," Pelosi tweeted after the meeting. "Our conversation will continue."
Stocks in New York were higher at the London equities close, with the DJIA up 0.5%, the S&P 500 index up 0.6%, and the Nasdaq Composite up 1.2%.
In addition to stimulus hopes, some encouraging US jobs data also helped to boost stocks, said IG.
"Coming just a day before the US jobs report, today's the greater-than-expected drop in initial and continuing jobless claims has helped raise hopes that tomorrows payrolls and unemployment rate will improve," said IG's Joshua Mahony.
US initial jobless claims fell by 36,000 but remained above the 800,000 mark for fifth straight week, figures from the US Department of Labor showed on Thursday.
In the week ended September 26, seasonally adjusted initial jobless claims totalled 837,000, a decrease of 36,000 from the previous week's revised level of 873,000. The figure beat the market estimate, cited by FXStreet, for 850,000 claims.
The figures provide a prelude to the closely-watched US jobs report for September on Friday. The US economy is expected to have added 850,000 jobs, while September's unemployment rate is forecast to ease to 8.2% from 8.4% in August.
The dollar was strong in the wake of the jobs data, brushing off the Institute for Supply Management's manufacturing purchasing managers' index slipping to 55.4 in September from 56.0 in August.
Against the yen, the dollar was trading at JPY105.58, up compared to JPY105.46 late Wednesday.
The euro stood at USD1.1745 at the European equities close Thursday, flat against USD1.1744 at the same time on Wednesday.
The pound was quoted at USD1.2889 at the London equities close Thursday, lower compared to USD1.2928 at the close on Wednesday.
Sterling suffered on Thursday after the European Commission began legal proceedings against the UK after the government refused to withdraw plans to override key elements of the Brexit divorce settlement.
Commission president Ursula von der Leyen said a "letter of formal notification" would be sent to the UK after ministers rejected a demand to withdraw the provisions from the UK Internal Market Bill by Wednesday of this week.
In a press statement at the commission headquarters in Brussels, she said the move marked the first step in an "infringement procedure" with the British Government now invited to send its observations within the month.
In London, the FTSE 100 ended higher despite a substantial share slide for constituent Rolls-Royce Holdings. The stock ended down 10%.
The jet engine maker outlined plans for a balance sheet boosting GBP2 billion rights issue, a GBP1 billion bond offering and the possibility of GBP2 billion more in loans.
The 10 for 3 rights issue will see Rolls-Royce issue 6.44 billion shares at 32 pence each. The issue effectively represents a 41% discount to its Wednesday closing price of 130p.
The Covid-19 pandemic has sapped demand for air travel. The damage to carriers has rippled through to plane makers, such as Boeing and Airbus, and on to makers of components and providers of aftermarket services, such as Rolls-Royce.
What's more, the company will turn to the bond market, offering GBP1 billion of debt, currently expected to be completed once the rights issue is settled. The company also received commitments for a two-year loan facility of GBP1 billion. The loan is conditional on the rights issue getting over the line and the cancellation of a GBP1.9 billion liquidity arrangement.
Royal Dutch Shell 'A' and 'B' shares closed 3.7% and 3.5% lower respectively while BP shed 3.1% on a fall in oil prices. Brent oil was quoted at USD40.13 a barrel at the London equities close Thursday from USD41.92 late Wednesday.
"It has been a double whammy for oil as OPEC confirmed that output in September was up 160,000 barrels per day when compared with August. The rise in output was largely down to an increase in production from Libya and Iran. To make matters worse for the oil market, health concerns are persistent, so that has chipped away at traders' perception of demand," said David Madden, market analyst at CMC Markets.
Gold was quoted at USD1,910.51 an ounce at the London equities close Thursday, up against USD1,898.89 at the close on Wednesday.
Rising in the FTSE 100 was SSE, ending up 3.7%. The energy firm warned that the coronavirus pandemic will hurt its first half outcome, but it continues to perform well and is making a good progress on divestments.
The FTSE 100-listed company estimates a hit of around GBP120 million to GBP130 million in the six months to September 30 from the virus outbreak. Overall, SSE estimates damage of between GBP150 million and GBP250 million in financial 2021, before mitigation measures.
For the first half, the Perth, Scotland-based company expects adjusted earnings per share in the range 10 pence to 12.5p, down at least 88% from 18.0p recorded a year ago. Energy output for the year to September 21 was 362 gigawatt, 9% below plan and a 3% shortfall on annual output.
The company, however, said its performance for the full-year and year-to-date remains broadly in line with the board's expectations.
Elsewhere in London, Halfords shares surged 30% as the bike and car parts retailer said it expects interim profit to more than double on a year before.
In the five weeks to September 25, like-for-like sales surged 22%, with cycling alone seeing a 46% jump during the period.
Many holidaymakers in the UK have opted to stay closer to home in their travels during summer 2020, amid ever changing international quarantine requirements, boosting demand for outdoor products firms such as Halfords.
"Despite the peak Cycling and Staycation season coming to an end, this positive momentum has continued," the company said.
Halfords now expects interim underlying pretax profit before IFRS16 in excess of GBP55 million, more than doubled annually from GBP25.9 million achieved in the six months to September 27 of last year.
Friday's UK corporate calendar has a trading statement from logistics company Wincanton.
In Friday's economic calendar is eurozone inflation at 1000 BST followed by the US jobs report for September - which includes nonfarm payrolls and the unemployment rate - at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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