On Friday, the blue-chip FTSE 100 index in the UK saw a rise, primarily driven by the strong performance of heavyweight oil and mining stocks. However, midcap stocks faced some pressure as shares of insurer Direct Line declined. All this happening just ahead of a highly anticipated U.S. jobs report.
The FTSE 100 index showed a 0.5% increase, while the midcap FTSE 250 index experienced a slight dip of 0.1%. Both indexes were poised to conclude the week with their most substantial weekly gains in six weeks.
Oil and gas stocks notably rose by 1.9%, and industrial metal miners added 0.8%. These gains were in sync with the positive sentiment stemming from China’s optimistic economic indicators and efforts to bolster investor confidence.
A private survey revealed that China’s factory activity unexpectedly returned to expansion in August. Additionally, China’s central bank announced its first reduction this year in the amount of foreign exchange that financial institutions are required to hold as reserves.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, noted, “The FTSE 100 has opened slightly higher… as broader optimism about what data from across the pond will say sets in.” She also highlighted China’s more assertive approach to stimulating its economy.
UK Shares Underperform European Peers
Investors eagerly await the August jobs report from the U.S., a critical indicator that will help gauge the future interest rate direction of the Federal Reserve.
It’s worth noting that UK shares have been underperforming their broader European counterparts this year due to their heavy exposure to commodity-linked stocks. These stocks have lagged primarily due to China’s lacklustre economic recovery and the Bank of England’s stringent stance on inflation.
In specific stock movements, Direct Line saw a 1.4% decline after agreeing to review the overcharging of existing home and motor customers, amounting to approximately £30 million ($38 million) for policy renewals.
Renishaw found itself at the bottom of the midcap index, dropping by 3%, following a price target cut on the engineering company by Jefferies.
On a positive note, Johnson Matthey surged by 14.0% to claim the top spot in the FTSE 100. This remarkable gain followed the news that the investment arm of Standard Industries, a New York-based industrial firm, had doubled its stake in the autocatalyst maker, bringing it to 10%.
The chemicals index also displayed strength with a 3.4% jump, contributing to the overall positive sentiment in the market.
