The FTSE 100 and European stocks remained in an upbeat mood on Tuesday, even as the latest UK jobs data showed more signs the cost of living crisis could spark a recession.
Across the Atlantic, stock prices painted a different picture, with Wall Street having a mixed start as investors assessed results from retailers Walmart (WMT) and Home Depot (HD), while signs of a slowing global economy continued to keep markets on edge.
London’s blue-chip index rose on the back of late rallies by US stocks overnight and good performance from mining stocks following record profits from Anglo-Australian mining group BHP (BHP.L).
Michael Hewson chief market analyst at CMC Markets UK said: “European markets have continued to edge higher, with the DAX and FTSE100 both eking out fresh two-month highs.”
“The UK index has been helped by a decent performance from the mining sector, with solid gains from Rio Tinto, Glencore and Anglo American.
Shares in BHP Group Limited surged 5% after the mining group posted its highest ever full-year profit on record commodity prices, and said it will push ahead with growth options on a stronger demand outlook in China.
Underlying profit from continuing operations — a measure tracked by analysts — rose 26% to $21.32bn (£17.69bn) on revenue up 14% to $65bn in the year to June.
Richard Hunter, head of markets at Interactive Investor, said: “The FTSE 100 again showed its mettle in the face of an uncertain economic outlook at home and abroad, and ticked higher in early exchanges to stand ahead by 2% in the year to date.”
“The index has become relatively fashionable in this challenging inflationary environment and remains underpinned by valuations which are still undemanding in relative terms to many global peers.”
“Miners forged ahead as a read across from some strong BHP numbers emanating from Australia, while an acquisition announcement from GlaxoSmithKline (GSK.L) kept the pharmaceutical momentum going following the previous positive drug news from AstraZeneca (AZN.L).”
Still in London, Ted Baker (TED.L) finalised a £211m takeover by US retail group Authentic Brands in a cut-price deal that could secured the future of the struggling fashion chain.
“The FTSE 100 enjoyed steady gains despite continuing signs of economic turmoil in the UK,” said AJ Bell financial analyst Danni Hewson.
“In a sign of the weaker backdrop, the number of job vacancies fell for the first time in two years, although it is not a clear picture, with serious issues filling roles in certain sectors.
“This makes life difficult for the Bank of England as it looks to bring down rampant inflation without inflicting too much pain on businesses and households.
“The other major takeaway from today’s figures is the biggest real terms pay fall on record. This drop in spending power is bad news for consumer-facing businesses.
Shares in Darktrace (DARK.L) were also in focus on Tuesday after it was approached by a US private equity giant. The cyber-security group confirmed last night after markets closed that it had been approached by Thoma Bravo.
“After a tumultuous year-and-a-bit on the stock market it looks like AI-driven cyber security firm Darktrace might be set for an exit into private equity ownership," Hewson said.
“You can see why going private might appeal. While Darktrace shares trade materially higher than the 350p IPO price, it has seen considerable volatility since its April 2021 float.
“The wild swings in the share price, while linked to instability in the tech space and wider markets, do suggest that UK investors have struggled to get to grips with this complex tech story.
“After all, Darktrace is in one of the hottest areas of the tech world, with demand for cyber security increasing amid concern over Russian cyber warfare linked to the conflict in Ukraine.
“The controversy surrounding its co-founder Mike Lynch hasn’t helped Darktrace, as he continues to fight extradition to the US on fraud charges.
“In the context of all these challenges, it is perhaps not that surprising that Darktrace may want to move out of the spotlight.”
Meanwhile, oil prices were down, with Brent crude (BZ=F) falling to around $92 a barrel.
In Asia, Tokyo’s Nikkei 225 (^N225) was flat at 28,868 while the Hang Seng in Hong Kong (^HSI) fell 1.13% to 19,814. The Shanghai Composite (000001.SS) made marginal gains, climbing 0.05% flat to close at 3,277 points.