FTSE 100 closes higher as US markets rally after tech falls

The FTSE 100 regained its poise on Wednesday, closing sharply higher, as US markets stabilised following positive jobs data.

The FTSE 100 index closed up 62.12 points, or 0.6%, at 9,777.08.

The FTSE 250 ended 98.90 points higher, or 0.5%, at 22,094.38, but the AIM All-Share fell 3.33 points, 0.4%, at 756.22.

With global markets in an edgy mood after Tuesday’s heavy US tech falls, sentiment in the Square Mile was lifted by news the UK service sector expanded last month, helped by a solid rise in new work.

S&P Global UK services purchasing managers’ index rose to 52.3 in October from 50.8 in September, breezing past the 51.1 flash reading.

The composite PMI, measuring the wider private sector, expanded to 52.2 in October from 50.1 in September, representing the sixth successive month of growth, and beating the flash score of 51.1.

Rob Wood, chief UK economist at Pantheon Macroeconomics said that “remarkably”, businesses are “brushing off the spectacle of months of tax hike rumours and kite-flying from the Treasury”.

Mr Wood estimates that the composite PMI is consistent with quarter-to-quarter economic growth of 0.2% in the fourth quarter, although he noted “that’s hardly rip-roaring”.

But he pointed out the PMI understates GDP growth when uncertainty is elevated, as it is now.

The pound was quoted at 1.3037 dollars at the time of the London equities close on Wednesday, lower compared with 1.3045 dollars on Tuesday.

The euro stood at 1.1476 dollars, down against 1.1494 dollars. Against the yen, the dollar was trading higher at 154.23 yen, compared with 153.41 yen.

In European equities on Wednesday, the CAC 40 in Paris closed up 0.1%, while the DAX 40 in Frankfurt ended 0.4% higher.

Stocks in New York were higher at around the time of the London close. The Dow Jones Industrial Average was up 0.2%, the S&P 500 index was 0.5% higher, and the Nasdaq Composite advanced 0.8%.

The yield on the US 10-year Treasury was at 4.15%, stretched from 4.10% on Tuesday. The yield on the US 30-year Treasury was quoted at 4.72%, widened from 4.67%.

Figures showed US private sector hiring increased last month, for the first time since July, in a reading that will be closely scrutinised as a wider data blackout because of the US government shutdown continues.

According to the payroll services provider ADP, the US private sector added 42,000 jobs in October, an outcome that beat the FXStreet cited expectation of 32,000 additions. In September, 29,000 roles were shed, revised from an initially reported 32,000 job losses.

Meanwhile, the October ISM services PMI picked up to 52.4%, rising from September’s 50%.

The data gave Wall Street a lift after a bruising few days which has seen valuations questioned amid talk of a tech bubble.

Kathleen Brooks at XTB said for now Tuesday’s sell-off “has failed to develop into something more sinister” and the US “tech sector does not look like it is on the cusp of bursting”.

“Valuation concerns do not tend to cause a sell-off by themselves, but high valuations can exacerbate a sell-off, which is what we saw on Tuesday,” she said.

Back in London, Marks & Spencer ended flat as it reported half-year results impacted by April’s cyber incident impact, which forced the firm to halt online orders after it was targeted by hackers,

M&S said pretax profit slumped 99% to £3.4 million in the half year to September 27 from £391.9 million the year prior.

The retailer took £101.6 million of costs from the cyber attack in the first half, while sales suffered across the business. Further charges of £34 million are expected in the second half of the financial year.

This was partially offset by £100 million insurance proceeds.

Chief executive Stuart Machin called the first half an “extraordinary moment in time for M&S,” but noted the “underlying strength of our business and robust financial foundations gave us the resilience to face into the challenge and deal with it”.

Barratt Redrow PLC climbed 0.9% as it reiterated guidance in the face of “challenging market conditions and increased uncertainty ahead of the November Budget”.

In addition, the housebuilder said it remains on track to deliver £100 million of cost synergies from the takeover of Redrow with confirmed synergies now at £80 million, an increase of £11 million from the £69 million confirmed in June.

Heading downwards were technology investors Polar Capital Technology Trust and Scottish Mortgage Investment Trust which fell 0.4% and 1.6% respectively in the wake of the recent falls in the US.

On the FTSE 250, Ceres Power rocketed 19% higher as it signed a new manufacturing licence agreement with Chinese engine maker Weichai Power, expanding their long-standing partnership.

The new agreement adds a fourth manufacturing partner to Ceres’ global network and is expected to generate “significant” licence fees, milestone payments and royalties, in line with previous licensing deals, the company said.

Also on the right track, Trainline, which climbed 5.3% as it raised its outlook although investors also kept a watchful eye on the government’s Railways Bill and the possible impact on ticketing operators.

The London-based digital rail and coach ticketing platform raised its adjusted earnings before interest, tax, depreciation and amortisation outlook to growth between 10% and 13%, from its prior outlook of 6% to 9% growth, and from £159 million in the financial year to February 2025.

The news came as the UK Government published its Railways Bill in which it said “customers and taxpayers are getting a bad deal for the fares they pay and the billions they invest”.

The Bill will create Great British Railways (GBR), a new publicly owned company, which will bring together the management of passenger services and rail infrastructure.

The Bill said that GBR will consolidate the 14 existing operator websites into a single online platform that will compete alongside independent retailers.

In its statement on Wednesday, Trainline said it has been taking an “increasingly assertive stance” with the Government to deliver on its commitment to fairness as the market operates today and in the future.

Brent oil was quoted lower at 64.35 dollars a barrel at the time of the London equities close on Wednesday, from 64.48 dollars late on Tuesday.

Gold traded higher at 3,978.61 dollars an ounce against 3,971.09 dollars.

The biggest risers on the FTSE 100 were Burberry, up 36.5 pence at 1,205.0p, Whitbread, up 74.0p at 2,874.0p, InterContinental Hotels, up 242.0p at 9,552.0p, British American Tobacco, up 92.0p at 4,142.0p and Coca-Cola Europacific Partners, up 150.0p at 6,830.0p.

The biggest fallers on the FTSE 100 were Smith & Nephew, down 24.0p at 1,393.5p, Babcock International, down 20.0p at 1,193.0p, Scottish Mortgage Investment Trust, down 18.5p at 1,134.5p, JD Sports Fashion, down 1.2p at 84.6p and Fresnillo, down 26.0p at 2,146.0p.

Thursday’s global economic calendar has the UK interest rate decision, eurozone retail sales figures and a slew of construction PMI readings.

Thursday’s UK corporate calendar has third-quarter results from pharmaceuticals firm AstraZeneca plus half-year results from grocer J Sainsbury. In addition, trading statements are due from spirits seller Diageo, builders’ merchant Howden Joinery and engineer IMI.

Contributed by Alliance News