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Aug 24, 2023

FTSE 100 close: London markets round off the week in the green as US economy impresses again

By: Chris Dorrell London markets

By: Chris Dorrell

London markets recorded one of their best days in months as investors were buoyed by a strong jobs report from the US suggesting its a long way off recession.

The capital's premier index climbed 1.46 per cent to 7,599.29 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, jumped 1.56 per cent to 19,120.75 points.

Markets around the world were higher after a strong jobs report from the US threw off concerns that it might be facing an economic slowdown.

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The US economy added 339,000 new jobs in May, nearly twice as many as expected. Although the report complicates life for the Federal Reserve, it demonstrates the strength of the US economy despite fears of recession.

In London the FTSE 100 was boosted by a strong performance from miners and natural resources companies.

Antofagasta rose 5.7 per cent, Anglo American 5.0 per cent and Rio Tinto 3.7 per cent. The mining giants tracked commodity prices higher.

On the FTSE 250, animal drugmaker Dechra rose nearly eight per cent after it backed a £4.5bn takeover bid from Swedish investment firm EQT.

The deal represents a 44 per cent premium to Dechra's last closing share price.

The take private swoop comes amid a flurry of takeovers in the capital from foreign buyers this year and may fuel further fears of a bargain hunt on London's markets.

"While some shareholders may welcome the modest premium on offer, the long-term consequences of a hollowing out of the mid-sized universe from which future giants are likely to be drawn does not do much for the health of the wider UK market," AJ Bell's Russ Mould said.

Markets were also lifted as the US finally made decisive progress on the debt ceiling. The deal agreed by President Biden and the Republican speaker Kevin McCarthy passed through the Senate yesterday with bipartisan support.

The deal was passed just days before the world's largest economy would have fallen into default, risking global financial stability.

Senate Majority Leader Chuck Schumer said that the Bill's passage means "America can breathe a sigh of relief".

The pound remained steady at $1.2526.

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Animal drugmaker Dechra backs £4.5bn takeover swoop from Swedish firm EQT

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