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(Alliance News) - Stocks in London made healthy progress on Wednesday, shrugging off weak US data, after a survey showed the UK services sector returned to growth in May.
The FTSE 100 index closed up 14.27 points, 0.2%, at 8,801.29. The FTSE 250 ended 101.23 points higher, 0.5%, at 21,119.01, and the AIM All-Share closed up 0.84 of a point, 0.1%, at 754.35.
The Cboe UK 100 ended up 0.2% at 876.04, the Cboe UK 250 climbed 0.5% at 18,620.56, and the Cboe Small Companies advanced 0.4% to 16,709.10.
In European equities on Wednesday, the CAC 40 in Paris rose 0.5%, while the DAX 40 in Frankfurt firmed 0.8%.
The S&P Global UK services purchasing managers' business activity index rose to 50.9 points in May from 49.0 in April, improving upon the flash reading of 50.2 released late last month, and above the 50.0 no change threshold.
The UK composite PMI also returned to growth with a reading of 50.3 points in May, up from 48.5 in April, also improving on the flash reading of 49.4 points.
Rob Wood at Pantheon Macroeconomics said the figures show UK growth has "passed the worst" as President Trump walking back his "more ruinous tariffs cuts the panic that took hold in April".
In Europe, the Hamburg Commercial Bank eurozone composite PMI edged down to 50.2 points in May from 50.4 in April. The final reading came slightly ahead of the flash estimate of 50.1 points.
The HCBO eurozone services purchasing managers index fell to 49.7 points in May from 50.1 in April. It matched the flash estimate from April and came in above the 48.9 points cited by FXStreet.
In New York, the Dow Jones Industrial Average was up 0.2% at the time of the London equities close on Wednesday, as was the S&P 500. The Nasdaq Composite was 0.3% higher.
Markets on Wall Street climbed despite weak economic data raising fears that tariff uncertainty was hurting the world's largest economy.
US private sector employment rose by much less than expected in May, according to numbers from payroll processor ADP.
Private sector employment increased by 37,000 jobs in May, slowing from a revised 60,000 in April, and below FXStreet consensus of 115,000.
April's total was revised downwards from 62,000.
May's figure was the lowest monthly job total from the ADP count since March 2023.
"After a strong start to the year, hiring is losing momentum," said Nela Richardson, chief economist at ADP.
US President Donald Trump called on Jerome Powell, the chair of the US central bank, to lower interest rates.
"ADP NUMBER OUT!!! 'Too Late' Powell must now LOWER THE RATE," Trump wrote on Truth Social.
There was mixed news elsewhere as reports showed contrasting fortunes for US economic activity.
The S&P Global US services PMI business activity index recorded 53.7 during May, up from a reading of 50.8 in April and comfortably above the 50.0 no-change level. It was also higher than the earlier flash estimate of 52.3.
But the Institute for Supply Management Services PMI contracted in May for the first time since June 2024.
The ISM Services PMI indicated slight contraction at 49.9, below the 50-breakeven point for only the fourth time in 60 months, and down from 51.6 in April. It was also below FXStreet consensus for a rise to 52.0.
Admir Kolaj, economist at TD Economics, said the report was "disappointing", indicating that even the services sector is "starting to feel the pinch" from the uncertain trade environment.
He said the details of the report "were not particularly encouraging, with steep drops reported in business activity, new orders, and the backlog of orders".
"The only bright spot was the improvement in the employment subindex, which indicates that despite the challenging environment, services-based businesses are still hanging on to their workers and likely doing some moderate hiring," he added.
The pound was quoted up at USD1.3566 late on Wednesday afternoon in London, compared to USD1.3499 at the equities close on Tuesday. The euro stood higher at USD1.1425 against USD1.1385.
Against the yen, the dollar was trading lower at JPY142.98 compared to JPY143.24.
The yield on the US 10-year Treasury narrowed sharply to 4.38% from 4.46% on Wednesday. The yield on the US 30-year Treasury narrowed to 4.90% from 4.97%.
On the FTSE 100, Babcock International gained 4.3% amid further consideration of the UK defence spending review this week. JPMorgan placed the stock on its 'positive catalyst watch' list.
On the FTSE 250, discoverIE Group jumped 15% after reporting higher profit and an increased dividend.
The Surrey, England-based designer and manufacturer of electronic components for industrial applications said pretax profit was GBP32.0 million in the financial year ended March 31, up 44% from GBP22.2 million a year ago.
Revenue fell 3.2% to GBP422.9 million from GBP437.0 million.
The company recommended a final dividend per share of 8.60 pence, up 4.2% from 8.25p a year ago. This took the total payout to 12.5p, up 4.2% from 12.0p.
But B&M European Retail struggled, falling 14% as its annual results failed to inspire investors.
The Luxembourg-based retailer said pretax profit fell 13% to GBP431 million in the 52 weeks to March 29 from GBP498 million a year prior, hurt by higher interest and finance costs.
B&M, which has 777 stores in the UK and 135 in France, as well as 343 Heron Foods and B&M Express shops, flagged heightened cautiousness to spend among consumers, and "very subdued" garden spending due to poor weather at the start of its financial year.
Russ Mould at AJ Bell said the shrinking profits "frame a poor year for B&M".
"The discount retailer blamed challenging market conditions, yet its value-led business model should have thrived in a period where consumers were watching their pennies," he said.
B&M's new Chief Executive Tjeerd Jegen takes over from current interim CEO Mike Schmidt on June 16 and Mould said his arrival cannot come soon enough.
"Investors will be looking for the new boss to do a thorough review of the business, work out what's gone wrong, do a 'kitchen sink' job and outline a plan to get back on top. B&M is quite a big beast in the world of retail, so this might not be a quick fix," he said.
The price of gold firmed to USD3,374.32 an ounce on Wednesday against USD3,349.93 on Tuesday.
Brent oil was lower at USD64.65 a barrel at the time of the London equities close on Wednesday, compared to USD65.73 on Tuesday.
The biggest risers on the FTSE 100 were Babcock International, up 44.00 pence at 1,066.00p, Games Workshop, up 530.00 pence at 15,950.00p, Antofagasta, up 56.50p at 1,850.00p, Hiscox, up 33.00p at 1,310.00p and Anglo American, up 53.50p at 2,233.50p.
The biggest fallers on the FTSE 100 were Marks & Spencer, down 7.90p at 366.70p, BP, down 6.85p at 358.55p, Haleon, down 6.10p at 399.00p, Hikma Pharmaceuticals, down 30.00p at 2,100.00p, and Centrica, down 2.30p at 161.70p.
Thursday's UK corporate calendar has full-year results from Wise Group, Dr Martens, Wizz Air and Mitie.
The global economic calendar on Thursday has the ECB interest rate decision plus US trade and weekly jobless claims figures.
By Jeremy Cutler, Alliance News reporter
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