London’s top-flight index rebounded on Friday and sterling gave up its gains as prime minister Theresa May overcame a major barrier in the Brexit negotiations.
Building materials company CRH closed the day up 1.5 per cent in Dublin on the back of rumours that US president Donald Trump is to ramp up infrastructure spending.
Ratings agency Standard & Poor’s (S&P) had revised its outlook on CRH’s credit rating to negative saying its spending on acquisitions leaves the building materials group vulnerable to any potential weakening in the market.
That came after chief executive Albert Manifold said the company expected to hit the pause button on major deals next year during an analyst dinner in London on Thursday.
However, a senior US administration official said yesterday that Mr Trump would release his long-promised infrastructure proposal in early January. CRH appeared to benefit from that, with about 3 million shares traded.
Elsewhere, Ryanair was up almost 4 per cent at one stage on the back of the Brexit deal between the EU and the UK. It eventually finished the day up over 3 per cent.
Other movers include Bank of Ireland, which closed up 1.5 per cent, and Greencore which finished up 2 per cent on good volume.
The FTSE 100 Index rallied back from falls in the previous session after the Brexit deal was announced.
Multinationals on London’s premier index tend to enjoy a boost when sterling suffers because they benefit from a more favourable currency translation on their overseas earnings.
Lloyds rose 3.8 per cent, leading gains as the domestically-exposed bank also benefited from Brexit relief, while Barclays gained 2.5 per cent and HSBC 1.2 per cent.
Housebuilder Berkeley was the top gainer of the index, surging 8.4 per cent, after it announced a 36 per cent rise in first half profits. “The strong cash generation likely means year end net cash will be materially above consensus expectations of about £400 million,” UBS analysts said.
Other UK builders, which have suffered on fears Brexit would hurt the sector, also rose. Barratt Developments jumped 3.9 per cent while Persimmon and Taylor Wimpey rose 2.3 to 2.8 per cent.
In Europe, the banks index jumped 2.3 per cent after financial regulators reached a long-sought deal to harmonise global banking rules. Germany’s Dax climbed 0.8 per cent and the Cac 40 in France was 0.3 per cent higher.
Germany’s 10-year bond yield rose 1 basis point to 0.30 per cent, up slightly from three-month lows hit this week at 0.29 per cent.
“Bund yields had slipped below 30 basis points this week, so prices were already at high levels and that was in part because of risk aversion,” said Daniel Lenz, rates strategist at DZ Bank.
“Now that risk aversion is abating as we see the first breakthrough in Brexit negotiations. We also appear to have a solution to US budget talks.”
Wall Street indexes gained as US employers added more jobs than expected in November, cementing the case for an interest rate hike next week and adding to optimism about the economy heading into 2018.
Technology stocks such as Microsoft, Apple and Alphabet led the gains, extending their recovery from losses earlier in the week. Nonfarm payrolls rose by 228,000 jobs last month amid broad gains in hiring as the distortions from the recent hurricanes faded.
The Dow Jones Industrial Average was up 0.38 per cent, while the S&P 500 was up 0.49 per cent, and the Nasdaq Composite was up 0.64 per cent.
Microsoft rose 1.5 per cent; AbbVie 2.3 per cent and UnitedHealth 1.6 per cent, the biggest boosts to the S&P 500. Alexion Pharmaceuticals rose about 7 per cent and was the biggest S&P gainer, after a report said hedge fund Elliott Management wanted the company to take steps to boost its stock price, including by exploring a sale.
Shares of American Outdoor Brands slumped 11.25 per cent after the Smith & Wesson fire arms maker provided disappointing earnings forecast. Shares of Sturm Ruger also slipped 7 per cent.
– (Additional reporting: Bloomberg/Reuters)Tags: Albert Manifold, Bank of Ireland, Barclays, Business, CRH, Donald Trump, Eu, Greencore, HSBC, Lloyds of London, Markets, Microsoft, Ryanair, Theresa May