The FTSE 100 was higher on Thursday as debt ceiling negotiations took an important step forward and European economic data helped lift sentiment.
The FTSE 100 was 0.48% higher at the time of writing. The German Dax was 0.6% and the French CAC was flat.
“The FTSE 100 started the day on the front foot as the US debt ceiling deal was approved by the House of Representatives, virtually guaranteeing it will be signed off ahead of the extended 5 June deadline,” said AJ Bell investment director Russ Mould.
“This positive driver for stocks may not last as a US Treasury which has been draining its account at the Federal Reserve to keep the government going, thereby injecting significant liquidity into the system, reverses this policy and starts tapping the debt markets to bolster its coffers.
“For now, though, relief that a US default has been averted is dominating market sentiment.”
Eurozone inflation data was also helping to lift the mood as CPI fell to 6.1% from 7%. Commentators have suggested the ECB will now be able to hold off on more rate hikes.
UK housebuilders
UK housebuilders shook off disappointing UK house price data on Thursday with Persimmon, Barratt Developments and Taylor Wimpey all higher at the time of writing.
According to data from Nationwide, UK house prices slipped 3.4% in the year to May after slowing the pace of declines in April.
House prices fell 0.1% month-on-month after a 0.4% rise in April.
“UK house prices renewed their downward trajectory in May according to the latest figures from Nationwide.
“The recently reported sticky inflation in the UK has increased interest rate expectations and could have a dampening effect on the property market.”
Investors will be encouraged by Bank of England data signalling a pick up in activity, despite prices continuing to fall.
“Recent Bank of England data had shown some signs of recovery in housing market activity, although the number of mortgages approved for house purchase in March was still around 20% below pre-pandemic levels,” said Robert Gardner, Nationwide’s chief economist.
B&M European Value was the FTSE 100’s top riser for a second day in a row after reporting strong sales growth and cash generation yesterday.
Autotrader was down 4% as revenue in 2023FY grew 16% but operating profit slipped 9%.
“Auto Trader’s core marketplace has once again enjoyed an excellent year, delivering double-digit profit growth even against the backdrop of supply chain challenges in both the used and new car market,” said Wealth Club’s Charlie Huggins.
“The only fly in the ointment is the losses at Autorama, the recently acquired vehicle leasing business. This business is making annualised operating losses of £15m. Shareholders will want to see that loss significantly reduce in the year ahead.
“The acquisition of Autorama is part of Auto Trader’s transformation from an advertising platform where consumers go to research used cars, to a fully online marketplace where consumers can go to transact.”