UK shares broke a three-day losing streak on Thursday, with the FTSE 100 index gaining 0.3% and the FTSE 250 index rising 0.7%. This rebound was attributed to the pullback in U.S. bond yields and the softening of the U.S. dollar, which boosted investor sentiment. The previous session saw these indexes hit near one-year lows.
Long-term U.S. government yields eased from 16-year highs, while the U.S. dollar softened after it was revealed that U.S. jobs growth in September fell below economists’ expectations. This provided some relief to investors who were concerned about the impact of high levels of U.S. federal spending.
However, shares of Metro Bank slumped by 24.8% amid reports that the bank was in talks for an urgent capital raise of up to £600 million. The bank confirmed that it was evaluating options, including a potential fundraising. This news led to frantic trading and Metro Bank’s shares were briefly suspended.
In the broader market, copper prices fell for the fourth consecutive day, causing industrial metal miners to decline by 0.2%. Nonetheless, the market was mostly higher, with construction and materials stocks leading sectoral gains. This was driven by the 10.8% rise in the shares of ventilation products supplier, Volution Group, following higher annual revenue.
Several individual stocks also enjoyed gains. Imperial Brands saw a 1.6% increase after announcing a £1.34 billion share buyback program and reaffirming its annual forecast. Meanwhile, Ferrexpo, a Ukraine-focused producer of premium iron ore pellets, experienced a 2.4% rise in shares after reporting a 17% spike in total third-quarter production.
Tesco, the retailer, saw its shares rise 2.7% and topped the FTSE 100 after multiple brokerages raised their target price on the company. Additionally, industry data revealed that new car sales in the UK increased by around 20% in September, driven by a rise in registrations by fleet customers.
In conclusion, UK shares rebounded as U.S. bond yields eased and the dollar softened. While Metro Bank suffered a significant decline, the market as a whole showed positive movement, with gains in construction and materials stocks, as well as individual stocks like Imperial Brands and Ferrexpo. Tesco also saw a rise in share price, supported by favorable brokerages’ target price revisions. Furthermore, the strong performance in new car sales for September indicates a positive trend in the automotive sector.
– FTSE 100: The Financial Times Stock Exchange 100 Index, commonly referred to as the FTSE 100, is a stock market index that tracks the performance of the top 100 companies listed on the London Stock Exchange.
– FTSE 250: The FTSE 250 Index is a capitalization-weighted index consisting of the 101st to the 350th largest companies listed on the London Stock Exchange.
– U.S. bond yields: The yield on a bond refers to the return an investor receives on their investment in that bond, typically expressed as a percentage of the bond’s face value.
– U.S. dollar: The currency of the United States, which is widely used in international trade and finance.
– Capital raise: The process by which a company raises additional capital to finance its operations or expansion.
– Frantic trading: Trading marked by high levels of activity and intense buying and selling.
– Sectoral gains: The increase in value or performance of stocks within a particular industry sector.
– Share buyback: A corporate action where a company buys back its own shares from existing shareholders, usually as a means to return capital to shareholders or provide support to the company’s stock price.
– Annual forecast: A prediction or projection of a company’s financial performance for a specific period of one year.
– Iron ore pellets: Small, spherical balls of iron ore used in the production of steel.
– Brokerages: Companies or individuals who facilitate the buying and selling of financial securities on behalf of clients.
– Fleet customers: Businesses or organizations that purchase vehicles in bulk for their operations or for use by their employees.
– Automotive sector: The sector of the economy that encompasses the production, sales, and maintenance of automobiles and related products and services.
– Khushi Singh, Bengaluru
– Eileen Soreng
– Savio D’Souza