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.

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