The FTSE 100’s cyclical sectors were leading the way higher on Friday with the miners, financials and consumer stocks gaining and taking the FTSE 100 above 7,950.

Continuing the rally sparked by record Chinese manufacturing data earlier this week, the top three FTSE 100 risers were miners Antofagasta, Rio Tinto and Anglo American. Rio Tinto is up around 10% in a week.

“A sea of green greeted the main European indices on Friday including a 0.3% rise in the FTSE 100 and a 0.7% advance in the Dax. It was certainly a ‘risk-on’ day for UK equities, with the likes of Ocado and Scottish Mortgage Investment Trust among the top risers. Miners and packaging companies were also in demand, implying that investors continue to find reasons to stay optimistic despite patchy economic conditions,” said Russ Mould, investment director at AJ Bell.

Rightmove was slightly weaker after the property app said their engagement levels stumbled in 2023. Admiral was the FTSE 100’s top faller after analysts at Citigroup cut the insurer to neutral with 2,272p price target.

Other notable ratings changes include Bank of America’s 9,550p increased price target for London Stock Exchange and Numis cutting Rightmove to add from buy.

US Interest Rates

Sentiment was improved by comments from a Fed official suggesting the next rate hike from the United States could be just 25bps, instead of 50bps. “Right now I’m still in very firmly in the quarter-point move pacing,” said Atlanta Federal Reserve President Raphael Bostic.

Bostic’s comments invigorated equity bulls and US equity futures rose in line with European stocks.

A slower pace of rates hike will be welcomed by markets fixated on forecasting terminal US interest rates. However, Bostic is just one Fed official commenting after a string of strong economic data that warrants a higher level of interest rates.

Non-farm payrolls next week will provide further insight into the health of the world’s largest economy after adding 517,000 jobs in January.

The FTSE 100 was softer on Thursday as a raft of corporates updates disappointed markets and offset strong gains in CRH. A weaker session in the US overnight dented sentiment as Tesla sank 5%.

The FTSE 100 was trading down 0.15% at 7,901 at the time of writing. The German DAX was 0.35% weaker and French CAC was dead flat.

“Markets in the US ended down a little yesterday with the S&P 500 falling 0.47% to 3,951.39,and the NASDAQ composite following suit closing 0.66% to 11,379.48. The fall came as 10-year bond yields in the US climbed again, flirting briefly with the psychologically important 4% level,” said Derren Nathan, head of equity research at Hargreaves Lansdown

Beazley was by far the FTSE 100’s worst performer, down 10%, after the insurer said profit before tax nearly halved in 2022. A net investment loss wiped out any strength in their Cyber security business.

Taylor Wimpey followed Persimmon in warning of a tough trading environment in 2023 as higher mortgage rates curtail demand for properties. Taylor Wimpey was down only 0.5% after tanking in line with Persimmon yesterday.

CRH was the standout FTSE 100 performer as the construction company revealed a deft management of input prices with a 10bps increase in EBITDA margin. CRH shares were 10% higher.

CRH also said they were going to shift their primary listing to the US, a blow for the London Stock Exchange at the same time ARM Holdings said it has decided on the US for their listing.

“Now we’ve got the news from construction group CRH that it wants to switch its primary listing to the US. That would mean it no longer qualifies for inclusion in FTSE indices and therefore would leave the prestigious FTSE 100 index,” said Russ Mould, investment director at AJ Bell.

“There is logic to the move. A large chunk of CRH’s earnings come from the US, so that’s where it spends a lot of time both operationally and talking to investors. There is also the fact that it could get a higher valuation by trading on the US stock market which could come in handy if it wants to issue shares for acquisition deals. Plumbing group Ferguson did exactly the same thing.”

“Efforts to relax the listing rules to attract more companies to London come across as a bit desperate. It should be a badge of honour to list in the UK, but that reputation is dwindling fast. Overseas investors lost interest in the trading venue as soon as the UK voted in favour of Brexit, and valuations have got even cheaper. That’s hardly a good sales pitch to attract more big companies to the UK market.”

Taylor Wimpey is the latest UK housebuilder to reveal marginally higher revenue for 2022, but warned of challenging conditions in the year ahead.

Taylor Wimpey revenue rose 3.2% to £4,419m in 2022 but investor focus is on the year ahead, and falling reservations levels.

Taylor Wimpey’s results echoed Persimmon’s update this week in as far as they both experienced a poor Q4 but had experienced some improvement in sales rates in the early weeks of 2023.

“Taylor Wimpey’s posted strong results in a tough environment for housebuilders. Higher average house prices helped drive group revenues forward last year, but the picture’s not so pretty for this year,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

“If current sales rates persist for the rest of 2023, full-year completions are expected to fall by around 30%, which would likely cause a big hit to profits. And while operating profits rose this year, tighter cost controls can only move the dial so far.”

Taylor Wimpey shares had given up just 0.4% of their value at the time of writing on Thursday having been dragged lower by Persimmons results yesterday.

Taylor Wimpey shares are up 15% higher year-to-date.

CRH, the construction company with operations in the Americas and Europe, has announced it will shift its primary listing to the US alongside strong performance for 2022.

While a 12% jump in revenue to $32.7bn and 13% increase in EBITDA to $5.6bn will be welcome news for investors, the decision to shift their primary listing to the US is a blow for London’s markets.

“So much for making London the go-to place for companies to list their shares. London Stock Exchange is having to work overtime just to keep those already listed, let alone attract new ones,” said Russ Mould, investment director at AJ Bell.

“This week has delivered a triple blow to the stock exchange operator. First, we had reports that Shell looked at shifting its stock market listing and headquarters to the US, although that doesn’t seem to be on the table now. Second, reports suggest that chip designer Arm will not return to the London stock market and instead opt for a US listing.”

“Now we’ve got the news from construction group CRH that it wants to switch its primary listing to the US. That would mean it no longer qualifies for inclusion in FTSE indices and therefore would leave the prestigious FTSE 100 index.”

CRH Results

Strong performance in North America and Europe drove higher revenues and the company has successfully navigated higher input prices by achieving a 10bps increase in EBITDA margin to 17.2%.

“Our 2022 performance reflects the outstanding commitment of our people, the underlying strength and resilience of our business and the continued delivery of our integrated, solutions-focused strategy,” said Albert Manifold, Chief Executive of CRH.

“Despite significant cost pressures throughout the year, we delivered further improvements in profits, margins and returns. Our strong cash generation together with our relentless focus on disciplined capital allocation has also delivered the strongest balance sheet in our history, providing us with significant opportunities for further growth and value creation going forward.”

The inclusion of recent acquisitions also helped drive performance and CRH said their pipeline of potential acquisitions was a factor in their decision to switch their primary listing to the US. CRH said they believe the availability of capital in the US would be preferential to remaining a FTSE 100 company.