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LONDON MARKET CLOSE: FTSE 100 up thanks to US economic data

3rd Apr 2024 16:54

(Alliance News) - Stock prices in London closed mostly higher on Wednesday, after some data from the US reinforced the interest rate cut trajectory across the Atlantic.

The FTSE 100 index closed up 2.35 points at 7,937.44. The FTSE 250 ended up 39.75 points, 0.2%, at 19,753.64, and the AIM All-Share closed down 0.32 of a point at 742.08.

The Cboe UK 100 ended down 0.1% at 793.01, the Cboe UK 250 closed up 0.1% at 17,166.93, and the Cboe Small Companies ended up 0.7% at 14,656.34.

In European equities on Wednesday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended up 0.5%.

On Wednesday afternoon, there has been some US data for investors to digest.

The US private sector added more jobs in March than a month earlier, numbers from payroll processor ADP showed on Wednesday.

Private sector employment increased by 184,000 jobs in March, rising from 155,000 in February.

February's job growth was ahead of the FXStreet-cited market consensus of 148,000.

Annual wage growth for job-changers rose by 5.1% in March. For job stayers annual wage growth increased by 10%.

"The market is increasingly assuming that a US rate cut is some months away," said Kathleen Brooks, research director at XTB.

"After another strong data report, this time the March ADP private sector payrolls report, the market is increasingly expecting fewer rate cuts from the Fed this year, with the first rate cut currently on a knife edge between July and September."

Meanwhile, a senior bank official said the current strength of the US economy means the Federal Reserve should cut interest rates just once this year, and not until the final quarter.

Atlanta Fed President Raphael Bostic, who is a voting member of the Fed's rate-setting committee this year, told CNBC he now thinks the Fed should make just one cut this year – below the three that were predicted by Fed officials in March.

There was also data on the US service sector.

The seasonally adjusted S&P Global US Services purchasing managers' index edged down to 51.7 in March, a three-month low, from 52.3 in February. Falling closer to the 50-mark separating growth from contraction, it indicates growth decelerated.

Meanwhile, the S&P Global US composite PMI output index fell to 52.1 in March from 52.5 in February.

Separately, the Institute for Supply Management reported that the services PMI edged down to 51.4 in March from 52.6 in February.

"The renewed fall in the ISM services index in March is consistent with the message from the hard data that economic growth is slowing from the unsustainably strong pace in the second half of last year," analysts at Capital Economics said.

Stocks in New York were higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.6%.

The pound was quoted at USD1.2630 at the London equities close Wednesday, up compared to USD1.2564 at the close on Tuesday. The euro stood at USD1.0827 at the European equities close Wednesday, higher against USD1.0771 at the same time on Tuesday. Against the yen, the dollar was trading at JPY151.72, up compared to JPY151.60 late Tuesday.

In London's FTSE 100, Prudential lost 2.7% to 720.40 pence, after Barclays cut the insurer's price target to 1,390p per share from 1,640p, while Barclays rates the stock at 'overweight'.

In the FTSE 250, International Distributions Services rose 4.3%.

IDS unit Royal Mail proposed a change to its UK letter delivery offering, as it grapples with weaker volumes, in a move which could see "fewer than 1,000 voluntary redundancies".

The measures could trim the net cost of the UK postal universal service operation by GBP300 million per year.

"This is very dependent on how quickly reform is enacted and the rate of letter decline. These savings would allow Royal Mail to continue to invest in the modernisation and transformation of the business to provide products and services that customers want and reduce its environmental impact," IDS said.

On AIM, Genedrive shares surged 39%.

The molecular diagnostics company announced that the UK's National Institute for Health & Care Excellence has recommended in draft guidance that Genedrive's CYP2C19-ID test should be used as the point-of-care test of choice for ischemic stroke and transient ischaemic attack patients.

Brent oil was quoted at USD89.69 a barrel at the London equities close Wednesday, up from USD88.11 late Tuesday.

Gold was quoted at USD2,286.90 an ounce at the London equities close Wednesday, up against USD2,266.55 at the close on Tuesday.

In Thursday's UK corporate calendar, there are full year results from LungLife AI.

The economic calendar for Thursday has a producer price reading from the eurozone at 1000 BST.

There is also a slew of composite PMI data from the eurozone, Germany, and the UK.

Across the Atlantic, there is the weekly initial jobless claims from the US.

Meanwhile, financial markets will be closed in Hong Kong and Shanghai will be closed for Tomb Sweeping Day.

By Sophie Rose, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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