FTSE 100 close: Markets close in the green despite US jobs data pointing to possible recession
London’s blue chip index ended in the green on Wednesday despite weak data from the US raising the risk of a recession.
The capital’s premier index closed 0.37 per cent higher at 7,662.94 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, ended 1.14 per cent lower at 18,601.42 points.
Analysts suggested the market moved in response to weak jobs data from the US today. ADP employment figures undershot expectations which reinforced data from yesterday, suggesting that the labour market is beginning to weaken.
Although this suggests the US is on track for a recession, it also raises the chance that the Fed will move to rate cuts sooner rather than later.
“Sometimes markets go up on bad data, as it means rate cuts are coming, and sometimes they go down, since recession fears rise,” IG’s Chris Beauchamp commented.
The FTSE’s pharmaceutical companies performed well with AstraZeneca and GSK rising 3.1 per cent and 2.5 per cent respectively.
AstraZeneca announced positive trial results this morning for a new treatment for ovarian cancer.
Insurer Direct Line maintained gains from earlier in the day, ending over six per cent higher. Citi moved its rating from ‘sell’ to ‘buy’ on the shares.
AJ Bell’s Danni Hewson said the implication were that the shares had bottomed out after a torrid period marred by a cancelled dividend amid claims of inflation and bad weather.
“The shares remain down more than 30 per cent on the level at which they started the year and it could take some time for investors who had got used to a steady stream of income from the stock to be won over.”
Shares in Fulham Shore rocketed over 30 per cent after it announced it was being bought by Japanese food franchise company Toridoll in a £93m deal.
The offer represents around a 38 per cent premium on the firm’s closing price yesterday.
Hewson said: “One might argue that the 14.15p takeout price for Fulham Shore doesn’t fully price in its potential. Eighteen months ago, it was trading close to 20p a share, after all. But in an economically uncertain environment, the price on the table might seem reasonable given the circumstances and possibly the best deal that could emerge for some time.”
The pound slipped 0.22 per cent to trade at $1.2470. Yesterday it hit its highest levels against the US dollar since June last year as it climbed above $1.2500.