LONDON MARKET CLOSE: Investors shake off woes, back on "rally train"

Fri, 09th Jul 2021 17:25

(Alliance News) - Stocks in London surged back into the green on Friday, shrugging off Thursday's dire session, despite worrying signs from the UK economy.

"Yesterday's 'sea of red' has been washed away, replaced by an avalanche of green across global markets as investors step right back on to the equity rally train," IG Chief Market Analyst Chris Beauchamp said.

The FTSE 100 index closed up 91.22 points, or 1.3%, at 7,121.88 Friday. Despite ending the week on the front foot, the blue chip index still lost 0.1% this week.

The mid-cap FTSE 250 index closed up 256.60 points, or 1.1%, at 22,909.32. As a result, it added 0.8% over the past 5 days. The AIM All-Share index closed 0.24 of a point higher at 1,248.90 on Friday.

The Cboe UK 100 index closed up 1.3% at 708.36. The Cboe 250 closed up 1.1% at 20,595.88, and the Cboe Small Companies up 0.1% at 15,409.53.

In mainland Europe, the CAC 40 in Paris surged 2.1%, while the DAX 30 in Frankfurt gained 1.7%.

"It seems incredible to report, but, for US indices at least, the latest 'dip' - that one from yesterday of about eight hours - has already been bought. Yet again all the things that stock markets seemed to worry about yesterday don't matter today - a hawkish Fed, rising Delta cases and the imminent arrival of US earnings season have all been brushed aside as Friday's trading ends in Europe with markets in bullish form, while on Wall Street stocks have a definite spring in their step," Beauchamp continued.

Wall Street was tracking the European gains. The Dow Jones was up 1.3%, S&P 500 up 1.0%, with the Nasdaq Composite up 0.8%.

Mining stocks were the drivers behind Friday's rally.

Evraz gained 5.5%, BHP 4.3%, Rio 4.1%, Anglo 4.3%, while Glencore added 3.8% - crowning the FTSE 100.

CMC Markets Chief Market Analyst Michael Hewson said: "Concerns about the growth outlook prompted the People's Bank of China to cut its banks reserve requirement ratio by 50bps in a sign that the world's second biggest economy isn't anywhere near as robust as first thought. On the plus side this helped to give a boost to the basic resource sector and commodity prices."

Gold was quoted at USD1,809.40 an ounce Friday, higher than USD1,796.50 on Thursday. Brent oil was trading at USD75.70 a barrel, up from USD73.70 late Thursday.

Hewson added: "Airlines have continued to rebound in the wake of the upcoming easing of restrictions on double vaccinated travellers, with IAG and easyJet higher along with Jet2, which is enjoying a decent rebound after its big decline yesterday."

British Airways-parent IAG gained 1.9%, easyJet 1.8%, Jet2 4.0% and Ryanair rose 1.5%.

Land Securities also was amongst the top performers, advancing 3.2%, after reporting "good progress" on rent collection.

As of Wednesday, the FTSE 100-listed property owner said that it has collected 81% of the GBP103 million net rent due by June 24. It also said it will pay a 7.0 pence per share dividend in October in its first quarterly payout for financial 2022.

Vectura surged 14% to 154.60p, topping the mid-cap FTSE 250 index, after agreeing to be taken over Marlboro cigarette maker Philip Morris International.

Philip Morris will pay 150p per share in cash for Vectura, a Wiltshire, England-based inhaled drug delivery devices maker. Including a 19p interim dividend, the deal values Vectura at GBP1.04 billion.

Following the PMI offer, Vectura's directors withdrew their recommendation for a GBP958 million takeover by funds managed by private equity firm Carlyle Group. PMI's offer is a 10% premium to Carlyle's 136p per share bid.

PMI was up 1.6% in New York

Sterling was trading at USD1.3831 on Friday evening, up from USD1.3763 at the London equities close on Thursday.

The pound managed to shake off fears over economic growth peaking even after a weaker-than-expected UK gross domestic product reading.

UK GDP grew 0.8% in May from April, missing forecasts for a stronger monthly gain of 1.7%, according to FXStreet, and below April's growth of 2.0%, which itself was revised down from 2.3%. The economy remains 3.1% below its pre-virus level, the ONS said.

IG's Beauchamp said: "Despite a weaker UK GDP figure for May this morning the faith in the recovery remains undimmed."

The euro traded at USD1.1856 on Friday evening, rising from USD1.1842 late Thursday in London. Against the yen, the dollar rose to JPY110.20 versus JPY109.79.

Next week, the economic calendar will be focused on a series of consumer price index prints. On Tuesday, there is German consumer price index at 0700 BST, with France at 0745 BST, followed by a US consumer price index print at 1330 BST.

On Wednesday, there is a UK consumer price index reading at 0700 BST. There is a eurozone consumer price index on Friday at 1000 BST.

Elsewhere, there is a Bank of Japan interest rate decision early on Friday.

In the local corporate calendar on Monday, veterinary products firm Dechra Pharmaceuticals will issue a trading statement, while photobooth operator Photo-Me International will issue half-year results.

By Paul McGowan; paulmcgowan@alliancenews.com