7th Oct 2021 08:51
(Alliance News) -Â A temporary resolution to the US debt ceiling strife saw markets in Europe rebound on Thursday morning, though the mood could yet again turn sour as the keenly awaited US monthly jobs report edges nearer.
The FTSE 100 index was up 69.86 points, or 1.0%, at 7,065.73 early Thursday. The mid-cap FTSE 250 index was up 141.42 points, or 0.6%, at 22,528.04. The AIM All-Share index was up 2.77 points, or 0.2%, at 1,202.90.
The Cboe UK 100 index was up 1.0% at 701.98. The Cboe 250 was up 0.4% at 20,347.94, and the Cboe Small Companies down 0.1% at 15,415.64.
In mainland Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 1.2% early Thursday.
Risk-on mood has returned, said interactive investor's Richard Hunter, but sentiment remains "delicately poised".
Markets were rebounding after Senate Minority Leader Mitch McConnell, a Republican, proposed a truce over raising the US debt ceiling.
McConnell said Republicans would allow Democrats to vote for temporarily lifting the debt ceiling, which is about to expire, triggering a government default, "into December". This would give Democrats time to find a longer-term solution and will "protect the American people from a near-term Democrat-created crisis," McConnell said.
Treasury Secretary Janet Yellen had warned that it would be a "catastrophic outcome" if the debt ceiling were not raised in time, likely triggering a recession.
"The return of risk appetite, which may itself yet prove transitory, has fed through to a generally stronger opening, with potential growth sectors such as the miners and the housebuilders in focus," said ii's Hunter.
Shares in miners Antofagasta, Anglo American and Rio Rinto were up 3.5%, 2.5% and 1.6% respectively.
Precious metals miners tracked the price of gold higher. The shiny metal was quoted at USD1,765.70 an ounce early Thursday, up from USD1,760.00 on Wednesday. Fresnillo gained 2.3% and Polymetal International advanced 2.0%.
Housebuilders Persimmon, Berkeley and Barratt Developments rose 1.2%, 1.3% and 1.0%, respectively, after a bigger-than-expected jump in Halifax's house price index.
Month-on-month growth of 1.7% outstripped market forecasts, according to FXStreet, for growth to be in line with the 0.8% registered in August. This latest reading was the strongest rate of monthly growth since February 2007, Halifax said.
A 7.4% annual surge marked a re-acceleration from August's 7.2% rise.
Elsewhere in London, Pendragon shares rose 4.9% after the automotive retailer upgraded full-year guidance as car supply issues helped to bolster margins.
It now expects underlying pretax profit for 2021 to be around GBP70.0 million, up from a prior guidance range of GBP55.0 million to GBP60.0 million previously.
While supply issues has resulted in a reduction in the number of new vehicle deliveries achieved, margins have remained strong and helped to mitigate the volume shortfall. It also noted "unprecedented tailwinds" in used car margins.
"Whilst we also continue to expect a realignment of used vehicle margins over time, we expect these to remain strong for the remainder of this financial year, providing us with some mitigation to lower new vehicle volumes in particular," said Pendragon.
While a boon for Pendragon, supply issues for car makers crippled the German industrial sector in August, data showed.
Industrial output in Germany was down 4.0% month-on-month. Analysts had expected a much more modest 0.4% decline, according to FXStreet, after a 1.3% rise in July.
The manufacture of motor vehicles, trailers and semi-trailers dropped by 18% month-on-month - amid well-reported semiconductor shortages denting the automotive industry - while the manufacture of machinery and equipment was down 6.3%.
The euro traded at USD1.1565 after the data, higher than USD1.1538 late Wednesday.
Sterling was quoted at USD1.3595 early Thursday, up on USD1.3570 at the London equities close on Wednesday.Against the yen, the dollar was quoted at JPY111.29, down from JPY111.34.
The Nikkei 225 index in Tokyo closed up 0.5%. In China, financial markets in Shanghai remain closed for National Day Golden Week, while the Hang Seng index in Hong Kong surged 3.0%. The S&P/ASX 200 in Sydney closed up 0.7%.
Brent oil prices eased back after pushing to fresh three-year highs on Wednesday. The North Sea benchmark was trading at USD80.32 a barrel early Thursday, down from USD81.12 late Wednesday.
The economic events calendar on Thursday has the latest US jobless claims at 1330 BST.
"Stock traders will be looking at today's jobless claims data to gain a better understanding of the labor market's health ahead of the Bureau of Labor Statistics' big payrolls report tomorrow," said Naeem Aslam, chief market analyst at AvaTrade.
The weekly initial jobless claims figures come ahead of Friday's closely watched nonfarm payrolls report. It is expected to show an increase of 488,000 jobs in September, according to FXStreet, after a rise of 235,000 in August.
A better-than-expected nonfarm payrolls reading could lead the US Federal Reserve to announce policy tightening next month, while a soft number may heighten stagflation fears.
By Lucy Heming;Â [email protected]
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