MARKET REPORT: Hopes of US debt-ceiling deal lifts global markets

Global stock markets ended the week in positive territory amid hopes American politicians are closing in on a deal to extend the US debt ceiling.

On a steadier day for the main benchmarks around the world, the FTSE 100 rose 0.7 per cent, or 56.33 points, to 7627.20 while Germany’s Dax rose 1.2 per cent and France’s Cac 40 added 1.2 per cent.

On Wall Street, the S&P 500 was up 1.3 per cent, the Dow Jones gained 0.9 per cent and the technology-heavy Nasdaq climbed 2.2 per cent.

While negotiations between President Joe Biden and House Speaker Kevin McCarthy continue, the pair are close to signing off a deal that would raise the US government’s £25trillion debt ceiling for two years while capping spending on everything but military and veterans.

An agreement must be reached before the June 1 otherwise the US will default on its debt, hammering the economy and sparking panic on financial markets.

Calm: On a steadier day for the main benchmarks around the world, the FTSE 100 rose 0.7 per cent, or 56.33 points, to 7627.20

Calm: On a steadier day for the main benchmarks around the world, the FTSE 100 rose 0.7 per cent, or 56.33 points, to 7627.20

Michael Hewson, analyst at CMC Markets UK, said stocks enjoyed ‘an end-of-week lift after a negative week for stocks in general’.

He added: ‘The more positive mood appears to be being driven by some optimism that we might see the framework of a debt ceiling deal starting to unfold, with more details expected to emerge over the weekend, as we zero in on next week’s deadline.’

Rio Tinto led a rally among mining stocks after a vote of confidence from the City. Morgan Stanley said the FTSE 100 Anglo-Australian firm, which has been hampered by setbacks and environmental challenges, ‘appeared to have turned the corner’.

It said shares have been hit by demand concerns surrounding China and a slump in iron ore prices. But analysts said it was a ‘business with high-quality assets, a growing copper footprint, [and] improving operating performance’. As a result, the investment bank upgraded it from ‘equal-weight’ to ‘overweight’.

Shares, which have fallen around 15 per cent so far this year, gained 3.5 per cent, or 167p, to 4925p.

There were gains throughout the sector, with Antofagasta up 2.9 per cent, or 39.5p, to 1389.5p while Anglo American added 2.3 per cent, or 51.5p, to 2318.5p, Glencore gained 1.5 per cent, or 6.2p, to 422.65p, Endeavour Mining rose 2.2 per cent, or 44p, to 2010p and Fresnillo edged up 0.5 per cent, or 3.4p, to 656p.

But it was a sluggish session for housebuilders. Persimmon rose 0.5 per cent or 6.5p, to 1226p after Deutsche Bank Research issued a ‘sell’ rating and lowered the target price to 1212p from 1267p.

The broker cut its profit forecasts for the year to £354m from £444m to reflect ‘volume and margin pressure’. It also issued a ‘hold’ rating on Vistry Group – down 1.5 per cent, or 11p, to 740p – and Taylor Wimpey, which fell 1.5 per cent, or 1.75p, to 115.65p.

M&G gained 3.3 per cent, or 6.3p, to 198.35p after Morgan Stanley raised the asset manager’s target price to 270p from 247p.

Cyber security firm Darktrace sank 11 per cent, or 32p, to 260p after Bank of America Merrill Lynch slapped an ‘underperform’ rating on the stock.

Kin and Carta warned its revenue would be lower than hoped following industry-wide issues and contract delays.

The tech consultancy firm said clients have pressed pause on committing to spending on large programmes of work, meaning its revenue for the year to the end of July is expected to be flat.

Its shares tumbled by 9 per cent, or 6.4p, to 64.9p.

UK Commercial Property REIT rose 0.4 per cent, or 0.2p, to 51.2p after it sold a warehouse it has owned since 2009 for £74m, offloading its Wembley logistics asset to Covent Garden IP Limited.

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