The FTSE 100 touched the highest levels of Friday’s session after another bumper US jobs report suggesting underlying health of the US economy. Reports China was considering measures to help prop up the property sector also lifted the mood on Friday.

The FTSE 100 was trading at 7,574 at the time of writing, a gain of 1.12%. The S&P 500 was around 1% higher.

Today’s rally builds on yesterday’s gains ignited by a US debt ceiling deal which means the world’s US economy will avoid a default that would plunge the global financial system into meltdown.

“As expected, the Senate swiftly approved the new debt ceiling deal in the US prompting relief in the markets with the FTSE 100 making decent progress on Friday morning,” said AJ Bell investment director Russ Mould.

“A bigger bounce might have been forthcoming had investors not already been very much factoring in an agreement, with only a modest sell-off around the crisis. 

“With disaster averted for now, attention will turn to other matters which have been overshadowed by the drama in Washington.”

The other matters Mould alludes to include the health of the US economy and the next move by the Federal Reserve.

Judging by today’s jobs report, the US economy is ticking along just fine. The US added 339,000 jobs in May, beating median estimates of 195,000.

May’s jobs report is the 14th in a row that has beaten estimates suggesting the financial community is consistently over-pessimistic about growth. It strengthens the argument against a US recession predicted by some analysts.

Nonetheless, the good news for the US economy may prove to be bad news for equity investors hoping for lower borrowing costs in the short term.

With the US economy ticking along and inflation rates falling, there is no impetus or justification for the Federal Reserve to cut rates.

FTSE 100 movers

The FTSE 100’s top risers on Friday reflected a firmly risk-on mood in markets.

The highly-cyclical mining sector drove London’s leading index higher on Friday as Anglo American, Rio Tinto, Glencore, and Antofagasta stormed ahead.

If measures to stimulate the Chinese property market materialise, demand for natural resources will be supported and could translate to more robust mining earnings.

Anglo American was the FTSE 100 top riser, up 5.7% at the time of writing.

Financials joined in the rally led by Prudential who earn most of their revenue in China and Asia. Prudential was 4.75 higher.

As one would expect in a risk-on move in equities, shares with defensive attributes suffered.

BT, SSE, Vodafone and Centrica were the top fallers.

Ascent Resources has announced its intention to bid for the entire share capital of Amur Resources after ‘protracted’ discussions with the Amur board.

The announcement was made after Amur Minerals shares sank 88% to 0.225p as a result of trading ex-dividend due to the return of capital to shareholders following a disposal. Amur is paying shareholders a 1.8p special dividend after disposing of their Russia nickel-copper asset.

Ascent Resources are proposing to pay 1 Ascent share for every 21 Amur shares in issue. The deal would value Amur shares at 0.175p.

Taking into consideration the 1.8p dividend, the bid represents a 7.3% premium to the Amur closing price of 1.84p last night.

If the deal is agreed, Amur shareholders would own approximately 28.6% of the enlarged group, and Ascent shareholders would own approximately 71.4%.

Ascent included conditions to their proposal that Amur must have a minimum of $5m cash after paying the special dividend, and have no material liabilities.

Ascent says its vision is to combine Amur’s cash with its project pipeline in LATAM.

Ascent said Amur are yet to respond to their offer.

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.”

The FTSE 100 felt the strains on the Chinese economy on Wednesday as the index dipped following news that Chinese manufacturing activity contracted faster than expected.

China Manufacturing PMI fell to 48.8, lower than the 49.4 consensus. A reading below 50 signifies a contraction.

“Growth slowdown fears have accelerated as the latest data from China shows a faltering recovery, knocking back sentiment on markets,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Investors have been unnerved by the snapshot showing the Chinese manufacturing sector contracted again in May, while activity across services also slowed for the fourth month in a row. Far from being the powerhouse which will offset America’s slowdown, China’s economic recovery from the pandemic is looking more precarious.”

The FTSE 100 was down 0.85% at the time of writing. The index had nearly recovered early morning losses before the sellers reappeared in afternoon trade.

FTSE 100 movers

B&M European Value was the FTSE 100’s top riser after the budget retailer said they were carrying ‘excellent profitable momentum’ into 2024FY.

B&M’s revenues were 30.7% ahead of pre-pandemic FY20 levels on a constant currency basis in 2023FY and cash generated from operation jumped 44.8% to £866m.

B&M shares were 7% higher at the time of writing.

“During Covid B&M benefited as one of a handful of retailers which were able to stay open and operate. Its performance during this period therefore comes with an asterisk attached, which is why investors will be particularly pleased to see its value credentials paying off in a more normal retail environment,” said AJ Bell investment director Russ Mould.

“In theory B&M should be well placed against a backdrop where households are really watching their pennies and that is largely reflected in this latest trading update. The company is also generating lots of cash which it can return to shareholders.

Prudential shares were down over 5% after chief financial officer James Turner resigned amid a code of conduct breach. Turner is the 26th CFO of an FTSE 100 firm to step down this year.

Ocado was down 5% as the premium retailer looked set to be demoted from the FTSE 100.