(Alliance News) - Level messaging from the Federal Reserve and some disappointing US data bolstered stocks in London on Thursday, helping the FTSE 100 add over 60 points.
Also behind Thursday's move higher was a raft of corporate earnings, with Rentokil Initial topping London's blue-chip index and Morgan Advanced Materials crowing the FTSE 250.
"We've seen an avalanche of earnings updates today, most of them greeted with positivity, helping to push European markets and the FTSE 100 to its second day of gains after a poor start to the week," commented Michael Hewson, chief market analyst at CMC Markets.
The FTSE 100 index closed up 61.79 points, or 0.9%, at 7,078.42. The FTSE 250 ended up 44.01 points, or 0.2%, at 23,050.46, and the AIM All-Share closed up 5.50 points, or 0.4%, at 1,247.27.
The Cboe UK 100 ended up 0.9% at 704.97, the Cboe UK 250 closed up 0.1% at 20,817.77, and the Cboe Small Companies ended up 0.7% at 15,298.96.
In European equities on Thursday, the CAC 40 in Paris ended up 0.4% and the DAX 30 in Frankfurt ended up 0.5%.
A broadly positive reception to Thursday's packed UK corporate calendar - with nearly 20% of the FTSE 100 giving updates - and a less hawkish than expected meeting from the US Fed resulted in a higher finish for London stocks.
While the Fed signalled the US economy has made progress towards the central bank's QE taper goals, this was followed up by a more cautious tone from Chair Jerome Powell at a subsequent press conference.
"The Fed's inaction was met with a bit of cheer as some investors had anticipated the Fed to have been a bit more hawkish in light of further improvement in US economic data since their previous meeting in June and given the rapid rise in inflation. What's more, the somewhat hawkish tone of the July policy statement, was not echoed at the FOMC press conference by Powell," said Fawad Razaqzada, market analyst at ThinkMarkets.
Also helping to calm worries over quicker-than-expected policy tightening was disappointing economic data out the US on Thursday.
According to an initial estimate from the Department of Commerce, US gross domestic product grew at an annual rate of 6.5% in the second quarter of 2021. Chunkier growth of 8.5% was forecast, according to consensus cited by FXStreet. First-quarter growth was revised down to 6.3% from 6.4%.
In a further blow, the latest jobless claims figures also disappointed expectations. New claims for unemployment insurance fell to 400,000 in the week ended July 24, from 424,000 a week earlier. Although it represented a week-on-week fall in new claims, the latest figure undershot expectations of a greater decline to 380,000.
Digesting all this, global equities edged up and the dollar slipped.
The pound was quoted at USD1.3967 at the London equities close Thursday, compared to USD1.3881 at the close on Wednesday. The euro stood at USD1.1885 at the European equities close Thursday, against USD1.1807 at the same time on Wednesday. Against the yen, the dollar was trading at JPY109.54 compared to JPY110.09 late Wednesday.
Gold also bounced, benefiting from the weaker dollar. The precious metal was quoted at USD1,829.48 an ounce at the London equities close Thursday against USD1,800.47 at the close on Wednesday.
Stocks in New York were in the green at the London equities close, with the Dow Jones and S&P 500 both up 0.6% and the Nasdaq Composite 0.3% higher.
On the corporate side, Rentokil Initial, Informa, Anglo American and Royal Dutch Shell were all helping to drive up the FTSE 100 after well-received results.
Pest control and hygiene firm Rentokil topped the blue-chip index, rising 6.8%, as interim profit more than doubled to GBP148.8 million from GBP61.8 million a year ago on the back of an 18% hike in revenue.
Informa rallied 5.7% as it lifted its annual revenue outlook. Revenue for the first half of 2021 dropped 15%, though the business events and publishing firm's pretax loss narrowed to GBP91.0 million from GBP801.2 million.
Growing confidence drove a revenue guidance uplift for 2021 to at least GBP1.80 billion, from GBP1.70 billion previously. Adjusted operating profit is now expected to be above GBP375 million.
Anglo American shares gained 5.4% on a strong first half, which saw the miner's profit attributable to equity shareholders surge to USD5.38 billion from just USD471 million last year.
Shell 'A' shares rose 3.8% and 'B' shares advanced 3.9% as the oil major rebased its second quarter dividend to 24 US cents, up 38% quarter-on-quarter, and unveiled a USD2 billion buyback.
Shell also swung to a USD3.43 billion profit attributable to shareholders for the second quarter of 2021, from a USD18.13 billion loss a year earlier, and posted pretax profit of USD4.13 billion, swinging from a USD23.91 billion loss a year prior.
The energy major also got a boost as oil prices climbed on Thursday. Brent oil was quoted at USD75.51 a barrel at the London equities close, up from USD74.62 late Wednesday.
Shares in oil peer BP, which reports next week, ended up 1.3%.
Weighing at the bottom of the FTSE 100 was BT Group, which tumbled 6.6% as first quarter revenue and profit slipped. Revenue fell 3.4% to GBP5.07 billion and pretax profit was down 4.5% to GBP536 million.
"Our results were overall in line with our expectations during the quarter, with good performance in the UK offsetting challenging conditions in Global's markets," said BT Chief Executive Philip Jansen.
Amongst the mid-caps, Morgan Advanced Materials and Pets at Home bookended the index.
Morgan Advanced shares bounced 7.2% after the industrial products manufacturer swung to an interim profit of GBP56.2 million from a loss of GBP25.5 million a year ago. Morgan Advanced Materials declared an interim dividend of 3.2 pence compared to a year before when the firm decided against a dividend in the first half.
Pets at Home, meanwhile, slumped 5.7% despite strong sales momentum continuing into its new financial year, with revenue in 16 weeks to July 15 up 26% year-on-year. The firm said: "Notwithstanding an increasingly challenging cost environment, including the ongoing impact of the pandemic on operating costs, which we continue to estimate at GBP9m this financial year, we maintained our price competitiveness through the quarter."
As a hectic week for earnings draws to a close, Friday's corporate calendar holds results from British Airways parent International Consolidated Airlines, educational publisher Pearson and lender NatWest. Miner Glencore issues a trading update.
Friday's economic calendar has Japanese unemployment, retail sales and industrial production overnight, followed by German GDP at 0700 BST and eurozone inflation, GDP and unemployment at 1000 BST. US core personal consumption expenditures are due at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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