US debt ceiling deal helps stock market rebound

London’s top index regained lost ground on Thursday as it bounced back from a bruising performance on Wednesday.

The FTSE 100 added 82.17 points, a 1.2% gain, after energy prices eased, taking pressure off traders.

It pushed the index up to 7,078.04, just over the 7,077 that it had ended on Tuesday, erasing the losses of Wednesday’s brutal session.

The rise was fuelled in London by mining giants like Rio Tinto, Anglo American and Antofagasta, who were cheered by events in Washington and on energy markets.

Fears that Republicans in the US Senate might block the debt ceiling from being raised – a potentially disastrous situation for the global economy – were allayed after a deal was announced.

This coupled with an easing of gas price rises helped boost confidence in the global economy, boosting the mining companies that supply many of the building blocks for that growth.

“Global economies still need a safety net, and the US has just stitched a hole in a big one,” said AJ Bell financial analyst Danni Hewson.

“Wall Street’s seen all indices push higher after a temporary agreement was struck to raise the debt ceiling.

“The news followed another boost to shares from decent jobs figures which suggest the labour market is getting back on track after putting the disruption from Hurricane Ida and a summer spike in Covid cases behind it.

“Stocks that have suffered falls in recent days are enjoying a resurgence of attention, with some investors undoubtedly bagging a bargain.”

In New York the S&P 500 was trading up 1.4%, just behind the Dow Jones index, which had gained 1.5%.

Europe’s big indexes were even further ahead, the Cac in Paris closed up 1.7% while the Dax in Frankfurt gained 1.9%.

In currency markets the pound would buy 1.3633 US dollars or 1.1789 euros by the end of trading in London, a rise of under 0.1% against both.

On an otherwise good day for its banking rivals, NatWest lingered close to the bottom of the FTSE 100 by the end of the day.

Earlier on Thursday the bank admitted it failed to live up to the requirements of anti-money laundering legislation.

The bank is facing a fine of up to £240 million for not properly monitoring the £365m that was deposited into one of its customer’s accounts between 2013 and 2016. Sentencing is in December.

Shares dropped by 1.4% following the news.

The only worse performer on the FTSE 100 was IAG, which owns British Airways, down 1.9%. The airline group also had a run-in with the Competition and Markets Authority (CMA), which has closed its investigation into whether Ryanair and British Airways broke consumer law by failing to offer refunds for flights customers were unable to take during lockdown.

The CMA said it was not certain it could ensure refunds, blaming “a lack of clarity in the law”.

The biggest risers on the FTSE 100 were Antofagasta, up 68p to 1,350p, Anglo American, up 130.5p to 2,656.5p, Standard Chartered, up 21.5p to 472p, Johnson Matthey, up 96p to 2,614p, and BHP, up 65.4p to 1,900.6p.

The biggest fallers on the FTSE 100 were IAG, down 3p to 176.82p, United Utilities, down 3p to 225p, Admiral Group, down 40p to 3,072p, Ocado, down 21p to 1,637p, and Hargreaves Lansdown, down 16p to 1,399p.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992