Global equity markets ended the week in positive territory as US politicians moved closer to an agreement to extend the US debt ceiling.
On a more stable day for major benchmarks around the world, the FTSE 100 was up 0.7 percent or 56.33 points to 7627.20, while Germany’s Dax was up 1.2 percent and France’s Cac 40 was up 1.2 percent increased.
On Wall Street, the S&P 500 was up 1.3 percent, the Dow Jones was up 0.9 percent and the tech-heavy Nasdaq was up 2.2 percent.
As negotiations between President Joe Biden and House Speaker Kevin McCarthy continue, the two are close to signing a deal that will raise the US government’s £25 trillion debt ceiling for two years, while reducing spending on would limit everything but military and veterans.
An agreement must be reached before June 1 or the US will default on its debt, weighing on the economy and causing panic in financial markets.
Michael Hewson, analyst at CMC Markets UK, said shares “rallied higher into the weekend after a negative week for equities in general”.
He added: “The more positive sentiment appears to be supported by some optimism that the framework for a debt ceiling agreement is beginning to unfold. More details are expected to be announced over the weekend while we focus on next week’s deadline.”
Rio Tinto led a rally among mining stocks after a vote of confidence from the city. Morgan Stanley said the Anglo-Australian company FTSE 100, which suffered from setbacks and environmental problems, “appears to have turned the tide”.
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Shares were said to have been hurt by demand concerns around China and a collapse in iron ore prices. But analysts said it is a “company with quality assets, a growing copper footprint, [and] “Improving Operational Performance”. As a result, the investment bank upgraded the weighting from equal to overweight.
Shares, which are down around 15 per cent so far this year, are up 3.5 per cent, or 167p, to 4925p.
There were gains across the sector, with Antofagasta up 2.9 per cent or 39.5 pence to 1,389.5 pence, while Anglo American was up 2.3 per cent or 51.5 pence to 2,318.5 pence and Glencore up 1.5 Endeavor Mining was up 2.2 percent, or 44 pence, to 2010 pence and Fresnillo was up slightly, up 0.5 percent, or 3.4 pence, to 656 pence.
But it was a sluggish session for home builders. Persimmon rose 0.5 percent, or 6.5 pence, to 1226 pence after Deutsche Bank Research issued a sell rating and lowered its price target to 1212 pence from 1267 pence.
The broker cut its profit forecasts for the year to £354m from £444m to reflect “volume and margin pressures”. Vistry Group was also given a hold rating – down 1.5 per cent, or 11p, to 740p – and Taylor Wimpey, which fell 1.5 per cent, or 1.75p, to 115.65p.
M&G rose 3.3 percent, or 6.3 pence, to 198.35 pence after Morgan Stanley raised the asset manager’s price target to 270 pence from 247 pence.
Cybersecurity firm Darktrace fell 11 percent, or 32 pence, to 260 pence after Bank of America Merrill Lynch gave the stock an underperform rating.
Kin and Carta warned that revenue would be lower than hoped due to industry-wide issues and contract delays.
The technology consultancy said customers have paused in committing to spend on large work programs, meaning revenue for the year through the end of July is expected to be flat.
Its shares fell 9 percent, or 6.4 pence, to 64.9 pence.
The UK commercial property REIT rose 0.4 percent, or 0.2 pence, to 51.2 pence after it sold a warehouse it had owned since 2009 for £74m and transferred its Wembley logistics facility to Covent Garden IP Limited.
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