UK's FTSE 100 clinches over two-month high on cooling Fed rate hike expectations
Market Performance and Key Drivers
July 2 (Reuters) - London's FTSE 100 hit an over two-month high in a broad-based rally on Thursday as a softer-than-expected U.S. jobs report calmed jitters about potential interest rate hikes by the Federal Reserve.
The blue-chip FTSE 100 index rose 1.7% to 10,652.9 points at the close, its highest since late-April. The midcap FTSE 250 also gained 0.4%, hitting a two-week peak.
Sector Highlights
Healthcare and Consumer Stocks
• The healthcare sub-index rose 4.4%, boosted by AstraZeneca, which gained 4.9% after striking a deal worth up to $1.77 billion with China's CSPC Pharmaceutical Group to develop treatments for kidney ailments.
• Consumer-focused stocks Tesco, Coca-Cola HBC and J Sainsbury rose between 2% and 3.7%.
Defence and Mining Stocks
• Defence stocks also rallied, with BAE Systems, Rolls-Royce, QinetiQ Group, Babcock, and Chemring up between 1% and 7.1%.
• Precious metal miners advanced 3.3% as gold prices rallied over 2% against a weaker dollar.
Macroeconomic and Geopolitical Factors
US Jobs Report and Fed Rate Hike Expectations
• U.S. job growth slowed more than expected in June and payroll gains for the prior two months were revised lower, pointing to a cooling labour market.
• Bets of at least one rate hike by the Fed this year lowered to 76%, according to data compiled by LSEG, from around 84% before the employment report.
Geopolitical Tensions and UK Business Sentiment
• On the geopolitical front, Iran and the United States concluded a round of indirect talks with no sign they had made headway toward lasting peace.
• Meanwhile, British business confidence fell to its lowest since 2022 as the Iran war, a survey of accountants showed.
Notable Individual Stock Movements
Retail and Energy Sectors
Currys and Memory Chip Shortage
• Among individual UK stocks, British electricals retailer Currys fell 1.4% after it warned that a global memory chip shortage could drive up prices for smartphones, laptops and other electronics later this year.
Capricorn Energy and Genel Energy Deal
• Capricorn Energy surged 19.8% after Kurdistan-focused oil and gas producer Genel Energy agreed to acquire the company in a $360 million all-cash deal. Genel rose 7%.
(Reporting by Tharuniyaa Lakshmi and Shashwat Chauhan in Bengaluru; Editing by Tasim Zahid and Diti Pujara)
