MARKET REPORT: Hopes of US debt-ceiling deal lifts global markets

Global stock markets ended the week on a positive note in hopes that US politicians will strike a deal 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 per cent.

On Wall Street, the S&P 500 rose 1.3 percent, the Dow Jones gained 0.9 percent and the tech-heavy Nasdaq climbed 2.2 percent.

As negotiations between President Joe Biden and House Speaker Kevin McCarthy continue, the pair are poised to sign a deal that would raise the US government’s debt ceiling of £25 trillion for two years while cutting spending on everything but military and veterans. would be capped.

An agreement must be reached before June 1, otherwise the US will not pay its debts, causing problems for the economy and panic in the financial markets.

Michael Hewson, an analyst at CMC Markets UK, said equities “enjoyed an increase at the end of the week after a negative week for equities in general”.

He added: “The more upbeat mood seems to be driven by some optimism that we are beginning to unfold the framework of a debt ceiling deal, with more details expected over the weekend as we focus on next week’s deadline . ‘

Rio Tinto led a rally among mining stocks following a vote of confidence from the city. Morgan Stanley said the FTSE 100 Anglo-Australian company, hampered by setbacks and environmental challenges, “appeared to have turned the corner.”

It said shares have been hit by demand issues around China and a slump in iron ore prices. But analysts said it was a “company with high quality assets, a growing copper footprint, [and] improving operational performance’. As a result, the investment bank upgraded it from “equal weight” to “overweight.”

Shares, which are down about 15 percent so far this year, gained 3.5 percent, or 167p, to 4925p.

There were gains across the industry, with Antofagasta up 2.9 percent, or 39.5p, to 1389.5p, while Anglo American added 2.3 percent, or 51.5p, to 2318.5p, Glencore gaining 1 .5 percent, or 6.2p, to 422.65p, Endeavor Mining was up 2.2 percent, or 44p, to 2010p and Fresnillo was up 0.5 percent, or 3.4p, to 656p.

But it was a slow session for homebuilders. 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 from 1267 pence to 1212 pence.

The broker cut its profit forecasts for the year from £444m from £354m to £354m to reflect ‘volume and margin pressure’. It also issued a hold rating on Vistry Group – down 1.5 percent, or 11p, to 740p – and Taylor Wimpey, which fell 1.5 percent, or 1.75p, to 115.65p.

M&G gained 3.3 percent, or 6.3p, to 198.35p after Morgan Stanley raised the asset manager’s price target from 247p to 270p.

Cybersecurity firm Darktrace fell 11 percent, or 32 pence, to 260 pence after Bank of America gave Merrill Lynch an “underperform” rating on the stock.

Kin and Carta warned sales would be lower than hoped due to industry-wide issues and contract delays.

The technology consulting firm said clients have paused to spend money on major programs of work, meaning revenue for the year is expected to remain flat through the end of July.

Shares fell 9 percent, or 6.4 pence, to 64.9 pence.

UK Commercial Property REIT rose 0.4 per cent, or 0.2 pence, to 51.2 pence after it sold a warehouse it has owned since 2009 for £74m, transferring its Wembley logistics assets to Covent Garden IP Limited.