Investors cheered news of a bipartisan agreement on a package of infrastructure spending in the United States, sending London markets higher at the close of the week.
“European markets are more mixed, but the FTSE 100 is back in positive territory as it steadily recoups last week’s losses; what has been remarkable is how indices around the world have shrugged off the Fed’s apparent change of outlook (which has been carefully walked back to some extent this week), and have resumed their march higher, presumably following the dangling carrot of economic growth as the woes of the world fade away.”
The FTSE 100 gained 0.37 percent, or 26.10 points, to 7,136.07, while the FTSE 250 gained 0.60 percent to 22,646.01.
Retail sales surged in June in the United Kingdom, according to a survey released earlier by the Confederation of British Industry, as the UK’s vaccination programme improved consumer confidence.
The CBI’s gauge of sales volume increased to +25 in May, up from +18 in May, and is now at its highest level since August 2018. The difference between the number of stores reporting higher sales and those reporting lower sales called the balance.
“After a bleak start to 2021, the sun finally shone for retailers in June, with seasonal sales volumes reaching their highest level since November 2016,” said CBI principal economist Ben Jones.
“This is the latest indicator that the vaccination program’s success is translating into increased consumer confidence, which, together with the reopening of hotels, is pushing shoppers out onto the streets.”
He did warn, though, that the industry is still a long way from full recovery.
Significantly, the Department of Commerce in the United Kingdom revealed a significantly slower-than-expected rise in personal consumption expenditure prices.
Following Nike’s well-received fourth-quarter earnings in the United States, JD Sports was the outstanding gainer on the FTSE 100.
The infrastructure transaction boosted shares of CRH, an Irish building materials company, and Ashtead, an equipment rental company, both of which conduct business in the United States. Positive broker remarks also helped Ashtead and CRH.
Credit Suisse raised its price objective on outperform-rated Ashtead to 6,000p from 4,100p, citing the company’s “positioned in attractive end markets” as a reason for the increase. Meanwhile, Berenberg upgraded CRH from a ‘hold’ to a ‘buy.’
WPP, the advertising agency, also gained after Credit Suisse upgraded it from ‘underperform’ to ‘neutral.’
UDG Healthcare was a little firmer after it said that Clayton Dubilier & Rice, a US private equity group, was exploring an increased final offer of 1,080p per share for the company.
Following dissatisfaction with the government’s travel guidelines, travel-related stocks were in the red. The Balearic Islands, Madeira, Malta, and Barbados were among 16 destinations added to the travel green list on Thursday. The Dominican Republic, Eritrea, Haiti, Mongolia, Tunisia, and Uganda were also added to the government’s blacklist.
IAG, the owner of British Airways, InterContinental Hotels, and Whitbread, the owner of Premier Inn, engine maker Rolls-Royce, Upper Crust owner SSP, cruise line Carnival, and travel business Tui were all downgraded.
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