FTSE charges higher on US ISM Manufacturing numbers in thin trade

<p>The FTSE 100 charged higher by over 1% heading into the close on Tuesday as risk appetite nudged higher after US ISM manufacturing data beat […]</p>

The FTSE 100 charged higher by over 1% heading into the close on Tuesday as risk appetite nudged higher after US ISM manufacturing data beat forecasts, including the highest reading in the employment section of the report since June last year and boosting jobs expectations ahead of Fridays non farm payrolls.

US ISM manufacturing surprisingly rose to 54.8 from 53.4 in April, its highest levels for 10 months, and beating forecasts for a small fall to 53.0. New Orders also grew strongly, bouncing from a previous months reading of 54.5 to reach 58.2 in April. Equally positive was the fact that the employment section of the report also rose to its highest levels since June last year hitting 57.3, marking its second consecutive monthly rise and considering we have ADP employment figures out tomorrow and non farm payrolls due out on Friday, this reading is well timed to give investors some optimism ahead of the both jobs numbers.

The FTSE 100 had been mostly treading water on gains of 0.4% for much of the session until the release of ISM manufacturing data that really breathed some life into what had been a fairly uneventful session. As soon as the US ISM data was released, the FTSE 100 immediately rallied over 40 points to trade above resistance levels at 5800.

Undoubtedly low volumes has played a role in exacerbating today’s rally with many European investors staying away from the markets with the Labour Day holiday seeing the most european markets closed for the day. In low volume markets we can typically see moves exacerbated somewhat and so its fortunate that today we have had a steady stream of positive news to help spike prices towards the upside.

Lloyds Banking Group was the top gainer on the day after forecast beating earnings. Upwards momentum helped Lloyds’ shares prices to rally progressively throughout the day, with gains of more than 6.5% making it the top performer on the FTSE 100. Royal Bank of Scotland closely followed along with Barclays as financial stocks played a heavyweight role in the FTSE’s charge higher.

Weaker than expected results from oil giant BP, who reported a fall in replacement cost profits excluding one off items to $4.80bn for the quarter against expectations of $5.10, despite crude oil prices being higher in the quarter. This slumped BP’s share prices just under 1% on the day.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.