LONDON MARKET CLOSE: Stocks rise as US reaches deal to keep lights on

(Alliance News) - Stocks in London ended higher on Thursday with investors letting out a sigh of relief after the US temporarily averted a catastrophic debt default.

US senators reached agreement to stave off a catastrophic credit default, after Democrats accepted a Republican offer to raise the debt limit for two months, top Democrat Chuck Schumer said.

"We have reached agreement to extend the debt ceiling through early December, and it's our hope that we can get this done as soon as today," announced Schumer, the Senate majority leader.

The FTSE 100 index closed up 82.17 points, or 1.2%, at 7,078.04. The FTSE 250 ended up 172.60 points, or 0.8%, at 22,559.22 and the AIM All-Share closed up 9.49 points, or 0.8%, at 1,209.62.

The Cboe UK 100 ended up 1.3% at 703.77, the Cboe UK 250 closed up 0.6% at 20,380.98 and the Cboe Small Companies ended down 0.4% at 15,362.00.

In Paris the CAC 40 stock index ended up 1.7%, while the DAX 40 in Frankfurt ended up 1.9%.

Stocks in New York were sharply higher at the London equities close following better employment data and relief at the diminished risk of a near-term US debt default.

The DJIA was up 1.4%, the S&P 500 index up 1.3% and the Nasdaq Composite up 1.6%.

"Progress in debt ceiling talks is boosting the mood in the market. The proposed deal in Washington will effectively see the can kicked down the road to December buying time and easing concerns. Whilst this is clearly a short-term answer, it is enough to keep the markets happy," said City Index analyst Fiona Cincotta.

US initial jobless claims fell by more than expected last week, data showed, boding well for Friday's nonfarm payrolls figure.

For the week to October 2, initial jobless claims fell to 326,000 from 364,000 the week before. This beat expectations for a narrower decline to 348,000, cited by FXStreet.

Continuing claims eased to 2.7 million for the week ended September 25 from 2.8 million the week prior. This marked a fresh post-pandemic low, the Department of Labor said, with continuing claims at their lowest level since March 14, 2020.

The data comes ahead of Friday's US nonfarm payrolls print. The US economy is expected to have added 488,000 jobs in September, up from a disappointing 235,000 in August.

In the FTSE 100, miners ended among the best performers amid higher metal prices. Antofagasta closed up 5.2%, Anglo American up 5.2%, Rio Tinto up 3.5% and BHP up 3.6%.

Spot platinum rallied 3.5% to USD987.50 an ounce on Thursday from USD953.50 on Wednesday, while spot palladium was quoted at USD1,916.05 an ounce, up 1.8% from USD1,882.00.

Shares in Royal Dutch Shell 'A' and 'B' shares closed up 1.2% and 1.0% respectively despite the oil major guiding for USD400 million in financial damage from Hurricane Ida, which tore through the US Gulf coast at the end of August.

Shell said the storm hit its operations in the US Gulf of Mexico and is expected to dent earnings in the third quarter. The Upstream segment is expected to take the biggest hit, with adjusted earnings knocked by around USD200 million to USD300 million, while Oil Products will take a hit of around USD50 million to USD100 million and Chemicals a USD100 million hit.

Shell last month said roughly 60% of its producing assets in the Gulf of Mexico region were back online. It noted its majority-owned West Delta-143 facility suffered "significant structural damage" from the hurricane.

Production in its Upstream arm is tipped to land between 2.0 million and 2.1 million barrels of oil equivalent per day in the third quarter, at best a 4.7% decline from a year earlier and an 18% drop from pre-virus levels in 2019.

At the other end of the large-caps, NatWest Group closed down 1.4% after the state-backed lender pleaded guilty to three historical money laundering offences in a landmark win for the City watchdog.

The offences were committed between November 2013 and June 2016 and related to "operational weaknesses" that involved the Edinburgh-based bank failing to properly monitor and scrutinise suspicious customer activity.

The case marks the first time the FCA has won a criminal prosecution under the money-laundering regulations and the first time the rules have been used to prosecute a bank.

In the FTSE 250, JTC ended the best performer, up 10% at 790.00 pence, after the Jersey-based fund manager raised GBP78.9 million in a placing of shares sold at Wednesday's closing price of 718.00p.

The funds raised will be used to help acquire US-based fund and structuring administration services provider SALI, in a deal worth up to USD236.0 million.

The pound was quoted at USD1.3625 at the London equities close, up from USD1.3570 at the close Wednesday.

The euro stood at USD1.1566 at the European equities close, up from USD1.1538 late Wednesday. Against the yen, the dollar was trading at JPY111.45, up from JPY111.34 late Wednesday.

Brent oil was quoted at USD81.76 a barrel at the equities close, rising from USD81.12 at the close Wednesday.

Gold was quoted at USD1,759.45 an ounce at the London equities close, little changed against USD1,760.00 late Wednesday.

The economic events calendar on Friday has a China services PMI reading overnight, Germany trade data at 0700 BST and the US jobs report at 1330 BST.

The UK corporate calendar on Friday has interim results from online retailer N Brown and trading statements from electrical parts maker Electrocomponents and from tenpin bowling operator Hollywood Bowl Group.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.